Michael Kors is expected to shut down up to 125 stores this year, according to various media reports. Sales at stores opened at least a year decreased 14.1% in the recent fourth quarter and continue to fall, and its wholesale business also fell 22.8% in Q4.
Fortune reported that the Michael Kors operates 827 stores, so the store closures represent about 15% of its locations. Total sales decreased 11.2% to $1.06 billion in the fourth quarter.
“Fiscal 2017 was a challenging year, as we continued to operate in a difficult retail environment with elevated promotional levels,” said Michael Kors CEO John Idol about its earnings in a press release. “In addition, our product and store experience did not sufficiently engage and excite consumers.”
Idol said the company acknowledges it needs to take further steps to elevate the level of fashion innovation in its accessories assortments and enhance the store experience in order to deepen consumer desire and demand for products.
In addition to its own store closures, Michael Kors plans to reduce its exposure in U.S. department stores.
Idol said the company plans to expand the fashion innovation in its accessory assortments, right-size its store locations and elevate its store experience. Fiscal 2018, he said, will be a transition year in which Michael Kors seeks to established a new baseline before returning to long-term growth.
“We have a strong brand, led by Michael Kors, with a history of fashion innovation and leadership, a global footprint with stores positioned in the best locations around the world and the marketing expertise to effectively convey our fashion stories,” Idol said.