Michael Kors Holdings has identified a steep drop in wristwatch sales as a key factor in disappointing second quarter financial results released today.
The handbag and and accessories giant saw revenue increase by just 0.2% to $987.9 million in the three months to July 2, despite opening 221 new stores since a year earlier, and acquiring its China business.
Like-for-like sales, were down 7.4%. Sales to independent retailers and department stores were also down 7%.
The company says it aims to reduce its dependence on department stores, which are accused of heavy discounting of the brand’s products.
Wristwatch sales have declined, albeit from a period of record sales, leading to a fresh focus on innovation in the smartwatch sector. It will also increase its investment in online retail. “For the Fall season, we are excited about the launch of several new digital flagships in Europe and the debut of our Michael Kors ACCESS line of smartwatches and trackers,” said John D. Idol, the company’s chairman and chief executive officer