Kors learns it the hard way

Recently, Michael Kors, a once well-known luxury brand realized their folly when they saw their top-line take a hit quarter by quarter even as they brought down the prices and introduced “attractive discounts.” Added to that, was the steady plummeting of the brand name and value.

This Monday (Nov. 6), shares of $KORS were up 13.6% after the luxury bag brand posted quarterly results — with earnings of $1.33 per share on revenues of $1.1 billion — exceeding market estimates. The reason for this turnaround was quite simple — a cut in discounts and a rise in pricier bags.

For FULL INFOGRAPHIC with segment-wise metrics, CLICK HERE.

While this means taking a few hits in the coming holiday quarter and the short-term, Kors looks to revive the brand and the business in the long-term with this shift in play.

With renewed resolve post the Jimmy Choo acquisition, Kors raised its FY 2018 forecast for total revenues to be about $4.59 billion. While this is seen as the immediate reason for shares jumping, it is quite clear that the luxury bagmaker has something in sight in its ambitious ‘Runway 2020’ strategy.

$KORS Outlook. More Guidance HERE…

“The positive signs that we are seeing in our business illustrate that our efforts across product innovation, brand engagement and our customer experience are beginning to take hold,” Chief Executive John Idol said in the earnings call.

All Infographic data is Y-o-Y.

Enter ‘Tapestry’, the new Coach, Inc.

Even as Michael Kors surprised market experts with its rally, the luxury fashion brand increasingly faces competition from a new one. With Coach, Stuart Weitzman and the newly acquired Kate Spade under one roof, came Tapestry.

While the re-coining last month (October) to ‘Tapestry’ from ‘Coach’ reflected the new identity of the brand housing the three well-known names in fashion retail, it isn’t off on an exciting start.

With the purchase and assimilation of Kate Spade, profits of the combined company took a $188 million hit all the while seeing a 2% slide in comparable sales at Coach stores, well below what the market expected.

For FULL INFOGRAPHIC with segment-wise metrics, CLICK HERE.

This Tuesday (Nov. 7), Tapestry posted a net loss of $17.7 million or $0.06 per share, down from the $117.4-million profit a year ago.

While the move to re-branding is claimed to reap fruit in the long-term, numbers say another story.

TPR Outlook. More Guidance HERE…

Whatever the case maybe, both are luxury and are more bags of money to investors than actual bags.

Tapestry views department stores as the scourge, with high-end brands seeing loyalties change in seconds. Maybe that is why it is collecting many brands under one roof. But is it working so far? Not so much.

Maybe it was better for Coach to retain its title, and jack up the prizes even further like Kors.

All Infographic data is Y-o-Y.

Endgame 2020

This fashion war has taken quite a turn with two brands taking two distinct strategies.

Whatever the case maybe, both are luxury and are more bags of money to investors than actual bags.

We can only look toward the future and see how this plays out in the end, or in 2020 as Kors has projected luxury Utopia to be at.