Strengthened Dollar Threatens Michael Kors Holdings Ltd (NYSE:KORS) Stores Traffic


Dallas, Texas 05/28/2015 (Financialstrend) – Michael Kors Holdings Ltd (NYSE:KORS) felt the full wrath of the street after posting earnings that fell short of the Street estimates.  The effects of a strengthened dollar came calling in the January-March quarter as spending in most of the stores fell short of expectations. The accessories brand was the hard hit by a slowdown in spending as sales from existing stores fell by 5.8%.

 Slumping Sales

 The retail store also seems to have been affected by shipping delays attributed to a standoff at the West Coast port that mostly affected footwear, small leather good products and women’s wear. Same-store sales in the U.S sunk by 6.7% with Europe posting a 5.6% drop in sales, something that prompted a reaction from the street forcing the stock to close on the red.

Michael Kors Holdings Ltd (NYSE:KORS) is also experiencing a slowdown in demand for its handbags in North America compared to the past where demand was strong.   Week mall traffic and weaker tourism traffic globally are some of the challenges that the company is grappling with, which continue to affect sales

 Muted Outlook

Michael Kors Holdings Ltd (NYSE:KORS) sentiments have further been hurt by the issuance of an outlook for the current quarter that falls short of the street’s estimates.  The company expects to generate revenues in the range of $930 million and $950 million against the street’s estimates of $1.1 billion

 The stock has not been on an impressive run over the past 12 months as investors remain worried of the risks at hand at the back of plans to open more retail and department stores.

A strengthened dollar means very few tourists are willing to spend more on the company line of products.  Michael Kors Holdings Ltd (NYSE:KORS) is not the only retail store that is feeling the effects of a strengthened dollar. Macy’s, Inc. (NYSE:M) and Tiffany & Co. (NYSE:TIF) are also facing their fair amount of struggles in the space as the number of tourists visiting the US continues to decline.