MICHAEL KORS

By: Irene Voong, Adriana Lopez, Jessica Nicole LewisFall 2014

About Michael Kors

● Global Luxury lifestyle brand. ● Started in 1981 offering American luxury

sportswear.● September 2000: First store opened in New

York● 2002: Opened store in Tokyo● Later, flagship store in the West Coast● Now offers ready-to-wear, accessories, and

footwear.● Two primary collections: Michael Kors

Collection and MICHAEL Michael Kors. ● Use top quality materials and craftsmanship in

products.● Michael Kors is now available in 85 different

countries and online.

Mission

“Michael Kors is the leading American fashion designer for luxury accessories and sportswear. The company's

heritage is rooted in producing polished, sleek, sophisticated American sportswear with a jet-set attitude.

Whether Aspen, Palm Beach or Capri, our mission is to bring our vision of a jet-set, luxury lifestyle to women

and men around the globe. Our products, emblematic of the highest standard of quality, include apparel,

accessories and beauty. Our lifestyle-driven company embraces the highest standards of creativity, quality,

technology and human resources.”

- Master in Times

Business Strategy & GoalsThree Segments● Retail● Licensing● Wholesale

Company controls global distribution networks through retail stores, department stores, specialty stores, and certain licensing partners. Under Two primary collections: Michael Kors Collection and MICHAEL Michael Kors.

2014 FY:288 stores in North America, 117 International stores accounted for 48.1% total revenue.

Goals● Increase revenue and profits● Strengthen Global Brand.● Global Brand awareness & customer

loyalty.● Expand retail stores in 600 high traffic

areas.● Increase wholesale sales in North America● Increase shop-in footprints for visuals.● Expanding existing stores.● offering new products● Expand internationally (Europe)

Financial Figures

*Source: Michael Kors 2014 Annual Report

Financial Figures

*Source: Michael Kors 2014 Annual Report

Competitive Analysis

How?Style, Price, Customer Service, brand recognition, quality and brand prestige.Have larger and diversified productsHave greater financial, technological,manufacturing, sales, marketing and distribution resources.

We face intense competition from other domestic and foreign accessories, footwear and apparel producers and retailers,including, among others, Coach, Burberry, Ralph Lauren, Hermès, Louis Vuitton, Gucci, Marc Jacobs, Chloé, Tory Burch and

Prada.

How to stay Competitive?

● Response to consumer demands at the right time

● Maintaining favorable name brand recognition

● Maintaining product quality

● Holding on to key employees

● Maintaining and holding market share

● Develop quality and unique products that appeal to the target market

● Maintaining loyal relationships with customers

● Pricing products appropriately

● Providing excellent customer service and support to retailers

● Optimizing retail and supply chain capabilities

● Determining size and location of retail and department store selling space

● Protecting intellectual property

Global Strategy

"We have plans to open in all the major cities, including London, Paris and

Milan, in the next three years, London is the next high priority. Then it will

depend on the availability of the best street, whether it's a street location or

inside of a mall. We'd rather wait than go into the wrong location."

- John Idol, CEO Michael Kors

Global Strategy

● Acquisition by Sportswear

Holding (Hong Kong) in 2003

● Moved corporate headquarters

to Hong Kong

● IPO in 2011

● Reincorporated in British Virgin

Islands in 2011

○ avoid US taxes & regulations

○ only taxed on revenues

earned in US

Michael Kors Milan

● Opened in 2008

● First European store

● Michael Kors & MICHAEL Michael Kors

“Italian customers are most discerning about quality, they like clothes that are fresh and fashion, but above all, they want clothes that will last and this is what I offer” - Michael Kors

Cross-Cultural Research - Italy

Entry Barriers - Italy

● Bersani Law (March 1998)

○ increase competition

○ favor modernization

○ decentralize decision making

○ regulatory power to local authorities

Michael Kors Madrid

● Opened in 2012

● First store in Spain, 17th in Europe

● Located in heart of Golden Mile

● Michael Kors and MICHAEL Michael Kors

"We knew that when the time was right to open in Spain, it would have to be in Madrid. It was just a matter of finding the right location. We’re well-situated in an area renowned for its great variety of luxury shopping and the Michael Kors brand will be a strong addition to that mix.”

- John Idol, CEO of Michael Kors

Cross-Cultural Research: Spain

Entry Barriers - Spain

Comisión Nacional de la Competencia

1. defining a large retail firm based on location

2. establishing criteria to determine size of

firm

3. defining firm as large if 25% is owned by a

large firm

4. establishing requirements to license

discount stores

5. restricting expansion or change of

ownership

6. requiring financial plans to license

commercial establishments

7. imposing outright bans on large retail

outlets

Michael Kors Tokyo

● Opened in 2011

● 2nd store in Tokyo

● “the mecca of luxury in Japan”

"I'm excited to open my largest store in Tokyo in one of the most vibrant places of the city. The energy and the quick pace of Roppongi Hills are perfect for my new store." - Michael Kors

Cross-Cultural Research: Japan

Entry Barriers - Japan

● Large-Scale Retail Location

Law

● 55% traditionals

● 12% large-scale retailers

Success

Success● Total revenue increased 42.7% to $1.1 billion from $740.3 million in the second quarter of fiscal 2014.● Retail net sales increased 39.4% to $495.6 million driven by 121 net new store openings since the end of

the second quarter of fiscal 2014 and a 16.4% increase in comparable store sales. Wholesale net sales

increased 46.1% to $514.1 million and licensing revenue increased 42.8% to $46.9 million.

● Revenue in North America increased 29.8% to $802.2 million, with a 10.8% increase in comparable

store sales. European revenue grew 108.6% to $237.9 million, with comparable store sales increasing

41.1%. Revenue in Japan increased 106.3% to $16.5 million, with comparable store sales growth of

52.9%.

● At September 27, 2014, the Company operated 473 retail stores, including concessions, compared to 352

retail stores, including concessions, at the end of the same prior-year period. The Company had 176

additional retail stores, including concessions, operated through licensing partners. Including licensed

locations, there were 649 Michael Kors stores worldwide at the end of the second quarter of fiscal 2015.

Should Michael Kors Go Global?YES!!

● Brand Recognition in all retail segmentations-domestic and internationally

● Acceptance brand name through target market

● Cater to diverse audience

● Have two labels: Michael Kors Collection and MICHAEL Michael Kors

● Runway ready-to-wear is wearable.

● Google ranked Michael Kors the 2nd

most searched high-fashion brand of the

year in its Zeitgeist 2013 report.

● Top fashion brand on social media of

2013 by social media analyst Starcount.