Michael Kors reported a bigger-than-expected drop in comparable sales for the holiday quarter, and issued weak forecast, sending its stock down. Fred Katayama reports.
Retailer Michael Kors existing store sales for the holiday quarter dropped more than expected. Hurting results: big promotions across the retail market and high demand for cheaper products. It's the sixth time Kors' sales dropped in the the past seven quarters. The famous handbag makers' disappointing sales and guidance sent the stock plunging. The company does not seeing things getting much better anytime soon. It said it expects weakness in North America and Europe to continue, partly because shoppers don't go to malls anymore. Charles Schwab's Omar Aguilar is cautious on the outlook for retailers. (SOUNDBITE) OMAR AGUILAR, CIO, CHARLES SCHWAB, (ENGLISH) SAYING: "We have seen that consumer spending is actually being a little big away from what consumer confidence is. And that gap is basically affecting those retailers. So, Yes, consumer confidence is pretty high, but we haven't seen the actual effect on spending, which if effecting retailers." Kors has tried to turn things around by expanding into dresses and menswear, investing in its online business, and reducing supplies to department stores. The company also said it will no longer discount its products, even though that could cost it market share and a chunk of revenue. In contrast, rival Coach's same-store stores sales rose three percent, their third consecutive quarterly jump.