Michael Kors to have 67 fewer promo days next quarter, pushes smartwatch

Following a stellar second-quarter performance, Michael Kors' CFO has outlined new strategies for the firm's holiday quarter, including fewer promotional days compared to last year, and the launch of a Google campaign to market the Access smartwatch.

On a conference call with investors, Kors' CFO, Thomas Edwards Jr., outlined the handbag maker's key strategies for the upcoming third quarter, designed to keep the US luxury company in top form, following last quarter's exceptional financial result.

For the all-important holiday quarter, Edwards announced the company expects to have 67 fewer promotional days compared to last year, for the same three-month period, due to last year's skyrocketing promotions.

"In the third quarter, we will be anniversary-ing the highest level of promotional activity in the prior year," said Edwards, during the call.

As a result, the new promotional strategy will result in a 66 percent reduction in promotional days across the company's digital flagships, compared to the prior year.

While Kors' women’s footwear and ready-to-wear remain strong, both categories recorded double-digit comp sales growth in the second quarter, the brand's fashion watch category sales are softening, and are expected to decline through the second-half of 2018, said Edwards.

To offset the drop, the firm is focusing on its wearable technology and innovative watch products and will launch a campaign with Google to market its Access smart watches during the holiday season.

Still looking to the holidays, the firm raised another cautionary flag, adding wholesale gross margins are likely to decline more than in previous quarters, on decreased sales. “We anticipate that sales will decrease more than our full year expectation of a low-teens decline," said Edwards.

On a positive note, Kors lifted its fiscal 2018 revenue forecast to $4.59 billion from $4.28 billion, helped out by recent acquiring of Jimmy Choo, adding the high-end shoemaker will be incorporated into the company's results beginning November 1.

For the key holiday quarter, the company expects Jimmy Choo sales to add up to $105 million to $110 million, said Edwards.

In the call, the firm reiterated it hopes to open additional Jimmy Choo stores, prominently in Europe and Asia, but said it expects to close between 40 and 50 group stores for fiscal year 2018.

With Reuters