Michael Kors aims to shut 125 stores as sales slide
NEW YORK - Michael Kors Holdings (KORS) plans to close up to 125 stores over the next two years with continued weak sales at its luxury stores.
The London company also issued a weak outlook, and its comparable-store sales (sales at stores open a year or more) were disappointing, sending shares down 8.5 percent, or $3.09, on Wednesday to close at $33.18.
The retailer lost $26.8 million, or 17 cents per share, after reporting a profit in the same period a year earlier. Earnings, adjusted for asset impairment costs, were 73 cents per share. The results topped Wall Street expectations by 3 cents, according to a survey by Zacks Investment Research.
Quarterly revenue fell 11.2 percent to $1.06 billion, but that, too, edged out expectations. For the year, Kors reported a profit of $552.5 million, or $3.29 per share. Revenue was reported as $4.49 billion.
Sales in the Americas region, which makes up the bulk of revenue, fell 18 percent to $721 million. And comparable-store sales, a key measure of a retailer's health, tumbled 14.1 percent, which was worse than Wall Street had expected.
"Fiscal 2017 was a challenging year, as we continued to operate in a difficult retail environment with elevated promotional levels," said Chairman and CEO John D. Idol. He said the company needs to take further steps to elevate "the level of fashion innovation" and enhance the store experience.
For the current quarter ending in July, Kors said it expects revenue in the range of $910 million to $930 million. Analysts surveyed by Zacks had expected revenue of $932.2 million. The company expects full-year earnings to be $3.57 to $3.67 per share, with revenue expected to be $4.25 billion.
Kors is hardly alone in taking drastic measures to contend with a brutal retail environment. More than two dozen U.S. brick-and-mortar retailers have already declared bankruptcy in 2017, and several more could follow suit.
Teen apparel retailer Rue21 filed for bankruptcy two weeks ago, and said it would close 400 stores to focus on online sales. Women's clothing label Bebe filed in April, announcing it would close all 175 stores and liquidate its inventory. That news followed bankruptcy filings by Payless, H.H. Gregg, BCBG Max Azria, The Limited, Wet Seal, Gander Mountain, MC Sports and Gordman's.
Others, including Macy's, Ralph Lauren, J. Crew, Abercrombie & Fitch, J.C. Penney, CVS and GameStop, are cutting back on locations. In perhaps the starkest sign of the historical shift away from department stores, Sears -- which traces its history to the 1880s -- warned in March that it may be forced to close.
