Luxury fashion label Michael Kors has experienced significant growth over the past year and is cutting into the business of rival fashion designers, including Coach. Michael Kors saw a sharp rise last quarter in comparable-store holiday sales and profit margins.
Michael Kors is best known for its line of luxury handbags, but the label has begun expanding into other types of fashion, including jewelry, accessories, and footwear. Company executives are optimistic about potential profits from its new footwear collection.
Recent stormy weather in the United States did little to affect demand for Michael Kors handbags and other luxury goods. The company’s expenses and inventory increased at a slower rate than its sales. Michael Kors had few markdowns, and they were due to late deliveries, not pressure from its competitors.
Coach has attributed its recently declining sales to design transitioning, a change in leadership, and an increasing focus on emerging markets. However, last month the company acknowledged that competition from Michael Kors was also a factor.
Michael Kors does not directly compete with European luxury companies, such as Louis Vuitton and Prada. However, as Louis Vuitton’s sales have slowed, Michael Kors may be poised to expand its presence in the European luxury goods market.
So far, competition from Michael Kors has not affected the sales of Burberry, which is known predominantly for its coats, but also offers a line of luxury handbags. However, Burberry’s sales are expected to slow, which could allow sales of Michael Kors products to increase.
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