Michael Kors (KORS) brought out the bad news about yet another poor quarter. Revenue fell 3.2% overall. Same-store sales dropped by nearly 7%.
The company tried to cast a positive light on the news, saying it would take the opportunity to revamp itself. Kors intends to reduce discounting of its goods and to improve the quality to a level fitting a luxury brand. Many retail observers say that Kors no longer qualifies as a luxury brand and must do nothing less than rebuild its brand.
Branding is vital for any company, but particularly for luxury goods. If the market senses that goods aren't high quality, or that they aren't good value unless on sale, then even the mightiest brands may suffer.
But Kors is not a good growth bet for 2017. It will have to work hard to reset itself after making a number of poor decisions over the years. In addition, Bernard Arnault, the CEO of luxury goods conglomerate LVMH, said that luxury goods markets tend to have 10-year cycles, and that that cycle is set to hit a downward trend.
