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Offenbach am Main, Germany
Michael Kors Holdings Ltd reported a bigger-than-expected drop in quarterly comparable sales as fewer shoppers visited malls and a strong dollar discouraged tourists from spending on its handbags and accessories.
U.S. retailers have been hurt as shoppers turn to the internet, reducing their visits to malls. Luxury goods makers such as Kors and rival Coach have also tightened supply to department stores to avoid deep discounting on their products, which they fear will erode their brand value.
From next year, Kors will stop participating in store-coupon promotions by North American retailers, Chief Executive John Idol said. "We will be removing ourselves from all of the department store 'friends and family sales' as well."
Sales in Kors' wholesale business, which supplies to department stores including Macy's and Neiman Marcus, declined 7% in the first quarter.
Sales at stores open more than a year slumped 7.4%, a drop bigger than the 4.7% analysts had expected, according to research firm Consensus Metrix.
Kors forecast revenue of $1.07 billion-$1.09 billion for the second quarter, below the average analyst estimate of $1.11 billion, according to Thomson Reuters.
Michael Kors, whose comparable sales have dropped in five of the past six quarters, expects a mid single-digit % decline in the current quarter.
Kors' revenue rose slightly to $987.9 million in the quarter ended July 2, beating the average estimate of $953 million.
Demand increased in Europe, mainly for "cross-bodies, small leather goods and athletic footwear", while handbag and watch sales weakened.
Customer visits slowed in its UK stores due to economic uncertainty after Britain voted to exit the European Union. Slowdown in tourism in France after recent attacks also hurt sales in Europe, said Idol.
Kors said it would open stores in Seoul and Singapore this Autumn to expand in Asia, its fastest-growing market. Overall net income dropped 15.7% to $146.3 million.