What’s next for Michael Kors?

What happened American heritage label Michael Kors is in trouble. After a proposed $8.5 billion merger between Capri Holdings and Tapestry was officially terminated on November 14, following a U.S judge’s ruling to block the deal after a Federal Trade Commission motion raised antitrust concerns in October, the Capri-owned brand now faces an uncertain future without the merger’s anticipated support. The results are the latest blow to the embattled retailer. Earlier this month, parent company Capri Holdings posted that Michael Kors had suffered a 16% YoY drop in revenue to $738 million in Q2 of FY 2025, with sales in the Asia region plummeting by 43%. Michael Kors Chairman and CEO John D. Idol said, “Overall, we were disappointed with our second quarter results as performance continued to be impacted by softening demand globally for fashion luxury goods. Despite the challenging global retail environment, we remain focused on executing our strategic initiatives to deliver long-term sustainable growth across all three of our luxury houses.” The merger deal, which was first announced in August 2023, promised a lifeline for Michael Kors which, in recent years, has lost its footing in the luxury market. It was intended to provide Capri’s portfolio with scale, positioning the group as a potential American rival to European luxury giants like LVMH and Kering. Market excitement centered on the prospect of Tapestry’s experts taking the reins at the struggling Michael Kors, potentially steering it onto a similar growth trajectory as Coach – a brand that has transformed from a faltering underdog to Gen Z favorite in recent years. Capri Holdings, meanwhile, had paused plans to revitalize Michael Kors, banking on the merger to deliver the transformation. But with the transaction officially off the table, where does Michael Kors go from here? The Jing Take Founded in 1981 by its eponymous designer, Michael Kors was once a pioneer in the accessible luxury category. Today, however, the brand faces mounting challenges in matching the design innovation and quality of its rivals. A miscalibrated pricing strategy and a shift away from signature products have also led to a gradual loss of relevance. Plagued by years of declining sales, Michael Kors’ pivot to e-commerce and retail exclusivity has struggled to engage customers. Attempts to court younger, trend-driven shoppers with trendier designs have similarly failed to resonate. Things have been particularly dire in China, too. Although China’s appetite for aspirational luxury – accessible products that marry quality with entry-level pricing – continues to grow, Michael Kors has struggled to keep pace with competitors like MCM, Coach, Longchamp, and Tory Burch, all of which consistently dominate the rankings on Xiaohongshu. Netizen reviews also reinforce Michael Kors’ waning influence. “The bags of MK in recent seasons are not as good-looking as those of Coach. If the prices are similar, I will choose Coach,” user @Luciano wrote on Xiaohongshu. Offline, more challenges in the mainland have come to light over the past year, during which the brand has reduced its network of premium retail stores by 11 locations in mainland China. Among the shuttered locations are flagship spaces in Beijing’s prime shopping hubs, Taikoo Li Sanlitun and APM Mall. The brand has since offset these closures by opening three new outlets, signaling an increasing reliance on discount-driven sales. Whether Michael Kors can revive itself remains uncertain. Yet, despite recent setbacks, the brand is doubling down on marketing efforts in China, appointing actress Yang Zi as its Asia-Pacific ambassador and launching experiential activations, such as a pop-up café in Chengdu. Globally, Capri Holdings reportedly plans to revisit pre-merger strategies to reconnect with its core audience, including an increased marketing spend slated for spring 2025, paired with the relaunch of its signature product offerings. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

What’s next for Michael Kors?

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Published November 19, 2024

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What’s next for Michael Kors?