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Michael Kors sales flag in Europe

Michael Kors Holdings’ overall revenue rose nearly 10% in the three months to 29 September, but retail sales in Europe for the Michael Kors brand fell 10% to $139.2m (£106.09m) from $154.2m (£117.52m) year on year.

Total revenue in the second quarter of its financial year rose 9.3% to $1.25bn (£952.6m), which included a $116.7m (£88.98m) contribution from luxury shoe brand Jimmy Choo, which the group bought in November 2017

However, Michael Kors’ retail, wholesale and licensing revenues declined in the quarter.

The brand reported approximately flat overall retail revenues of $643.9m (£490.94m) compared to $645m (£491.78m), while comparable store sales decreased by 2.1%.

Revenues for Michael Kors retail in America were up at $394.9m (£301.9m) compared to $385.5m (£293.93m) for the same period last year, while revenues in Asia also increased slightly to $109.8m (£83.72m) for the quarter, up from $105.3m (£80.25m) last year.

Wholesale revenue declined by 1.3% to $457.8m (£349.05m), while the licensing operating income was $9.8m (£7.47m) down from $10.5m (£8.01m) compared to the same period last year.

John Idol, chairman and chief executive at Michael Kors Holdings said the results “exceeded expectations”, and that he looked forward to welcoming Versace into the group. Michael Kors bought the Italian luxury house for $2.1bn (£1.6bn) in September this year

He said: “With the acquisition of Versace we have built one of the world’s leading fashion luxury groups in just one year, setting the stage for accelerated revenue and earnings growth. This is a truly remarkable and historic moment for our company, and we look forward to completing this transformational acquisition in the coming months.”

But Neil Saunders, managing director at GlobalData Retail, described the results as “disappointing”: “In our view, a lot of this difficulty comes down to one main factor: the Michael Kors brand is not back to full strength, and it still suffers from a lack of definition and a reputation tarnished by years of ubiquity.”

Saunders said Michael Kors needs to engineer a much clearer essence and positioning: “Perhaps because of the proliferation of lower-priced items, our data suggests that Michael Kors is still seen as being somewhat unsophisticated and less polished than many other luxury brands.

“This deters some potential customers and therefore limits growth from certain consumer segments looking for a more refined label.”

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