Luxury handbags feel the pain from discounts
Michael Kors revenue dropped in recent months because of discounts in North America; although the number of handbag units the fashion company sold increased, handbag sales declined, indicating skimmed dollars on sales.
The next move: The fashion company aims to sell its handbags at full price, by improving craftsmanship and using better-quality leather since its handbags at full price sold well all last season. Coach recently made a similar move to avoid discounted pricing.
Why this matters: The luxury bag market is crowded with competition, making it difficult to sell at premium prices and dragging prices down. Michael Kors CEO John Idol predicted dollar terms would not increase this year at all for handbags, per the WSJ.