Acquisitions flatter Michael Kors sales performance

Michael Kors sales grew 9.3 per cent to US$1.25 billion during the second quarter – but the figures were flattered by new acquisitions.

Jimmy Choo’s enduring success added a level of respectability, compensating for a 2.1 per cent decline in the Michael Kors division’s sales. Net income for the group fell 32 per cent to $137.6 million.

GlobalData Retail MD Neil Saunders said the results were disappointing after a good start during the first quarter.

“Although overall revenue growth looks robust, it continues to be flattered by the acquisition of Jimmy Choo, which has yet to annualise out,” Saunders said.

“In short, after slowly climbing the steep hill of recovery, Michael Kors now appears to be rolling back down in reverse.”

Saunders said the acquisition of Versace could prove to be a distraction that limits Michael Kors’ ability to fix the core problems with its main brand.

“Despite its status, Versace is also not a brand at the pinnacle of health: there is work to be done on boosting sales and re-energising the business,” Saunders explained.

“Given Michael Kors’ relative lack of success with its own label, we do not see the group being able to easy undertake the retooling required to generate superior results.”

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