So Michael Kors, we meet again. Some of you that follow @TalentedBlonde knew my negative stance on the stock back in March in this missive.
For those of you that missed it or simply were indifferent, here’s why the Street missed this massive fail: Firstly, a greedy management team basically bastardized the brand by lowering the opening price point for a handbag (the gateway drug of retail) to such a low level that the cache of Michael Kors was stupefied.
Like Tommy Hilfiger and Coach the self-imposed “logorrhea” and low price points decimated this “Jet-Set” brand from G6 to Cessna overnight. That said, the looming West Coast Port work “slow-down” and appreciation of the dollar were eminently avoidable earnings issues. I lamented as far back as October 2014 about the port crisis. This is not a consumer preference issue—this is the fault of a management team caught with their pants down. Like Wal-Mart with all the consumer and financial analytics available to them—how did they not effectively hedge FOREX risk, given the astonishing appreciation of the U.S. dollar? Trust me, I believe John Idol is a competent merchant, but for this type of loss, someone needs to be held accountable. Forward looking guidance that guarantees Forex headwinds will fade in the second half, sounds like empty promises, but that’s just me. A management team that missed something SO obvious has demonstrated little to suggest that they are ready to navigate both global volatility as well as shifting consumer preference.
The sniffles at Michael Kors foreshadow a flu in Corporate America. The inability or unwillingness to recognize and adapt to structural changes, whether they be FOREX, labor related, or shifts in consumer behavior is indicative of complacency of Corporate America who remains static in their approach to the nascent ‘Digical Economy.’ Below some fun Chart Porn for your viewing pleasure.
The post Blonde Archive: Michael Kors Wounds Self-Inflicted (7/29/2015) appeared first on Kristin Bentz | The Talented Blonde.