Last year, Michael Kors pulled back on its department store presence and stopped accepting coupons for its merchandise in those locations in order to polish its brand and increase sales, but those changes have apparently only harmed the brand’s value. Now, the luxury accessories retailer is prepping to close at least 100 of its stores.
Michael Kors announced the upcoming closures in an effort to improve profitability after the company recorded a $193.8 million loss in the fourth quarter of 2016 tied to underperforming stores.
The closures will occur over the next two years, at which time the company expects to realized $100 million to $125 million in one-time cost savings. Specific locations closures have yet to be announced.
Comparable store sales fell by 14.1%, while sales over the fiscal year decreased 8.3%.
In an effort to turnaround falling sales, Michael Kors announced in Aug. 2016 that it would be making some changes to its business model, namely removing itself from the department store equation.
According to the company, deep discounts at such store led customers to think that the brand is worth less than it was, which in turn lead to dips in revenue and profit margins for both department store and standalone store sales.
In the end, the company said it would offer fewer products at department stores and exclude those items from department stores’ “friends and family sales” and coupons.