How does the luxury goods market look in light of Michael Kors' sales figures

First published: 05-06-2014

Luxury goods brand Michael Kors - which specialises in handbags, high-end clothing and of course, watches - has reported a significant increase in both revenue and comparable sales for its fourth trading quarter, which accounts for the period ending on March 29th 2014.

As of this date, there were 555 Michael Kors stores located throughout the world, including concessions, which contributed to a revenue increase of 53.6 per cent, taking its total current value to £548 million.

Gross profits grew by 54.2 per cent to £328 million, while retail net sales rose by 49.7 per cent to £243 million. The latter figure is thought to be primarily down to a 26.2 per cent increase in comparable store sales, as well as due to the openings of 101 new stores over the last 12 months.

Chairman and chief executive officer of Michael Kors John D Idol commented: "We believe that our expanding global brand awareness is driving continued strong demand for our luxury product and fuelling our growth as a global luxury lifestyle brand. 

"In addition, Michael Kors and our talented design team continue to deliver exceptional products while the distinctive jet-set in-store experience that we offer in both our retail stores and out shop-in-shops continues to resonate well with our consumers."

From the sales figures, it is clear to see that Michael Kors' watches, handbags and so on are popular among consumers, but what do they mean for the luxury goods market as a whole?

The brand might be based in Hong Kong, but it has been having a significant impact on the worldwide market, with revenue in North America alone rising by 43 per cent and more than doubling in Europe.

In addition, reports suggest Michael Kors is holding its own against competitor brands within the luxury goods market, taking sales away from well-established labels such as Louis Vuitton - an impressive feat considering the Hong Kong brand has only been operating for 33 years, while its rival is currently in its 150th year.

However, a study from Italian luxury industry association Altagamma predicts the global high-end goods market will only increase in value by 4.6 per cent this year, a significantly slower rate of growth than the 6.5 per cent recorded in 2013.

The industry body found that the amount consumers are spending on luxury goods is still at a steady level though, with purchases of watches, other jewellery, cosmetics and perfumes recently increasing by six per cent.

Despite this, Michael Kors' recent financial results show the luxury goods market is still a popular one and is continuing to attract consumers.

The brand has said it expects its revenues for the first quarter of the next trading year to reach in the region of between £500 million and £510 million, with figures for fiscal 2015 expected to total around £2.4 billion.

Mr Idol concluded: "Overall, we have great momentum as we head into fiscal 2015 and remain very excited about our growth prospects for next year and beyond."

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