International Financial Analysis of Michael Kors - Research Paper Example

International financial of Michael Kors. Michael Kors is an American national. He is aged 55. He began his fashion design career at a very early age. He was born in New York at a place called Long Island. He is a fashion designer based in the United States of America. He is the chairman and the chief creative officer for his farm called Michael Kors Holding Limited. He has been successful in the fashion because he has received several awards.Michael Kors designs and sells high quality fashion apparel, accessories and foot wares for both male and female. The company has a worldwide reputation. It is known for designing special outfits for celebrities and other people. The company has expandedits portfolio in recent years, it has received several likening to allow it sell other fashion related stuffs.The company has a retail network where it sales its products. The company operates an online platform where its customers can purchase from any part of the world. In this paper, the financial analysis of Michael kor’s firm shall be discussed. International financial of Michael Kors It is not always easy to start a fashion design firm. It is a business that takes a lot of time before it picks up. The Michael Kors firm has been rapidly growing over time ever since it was launched 30 years ago. The enterprise has picked up in the international platform. What began as a personal incentive operates in more than 95 countries. The firm has had a good financial fortune from the international stage. The firm’s online platform makes it easier to sell its products with ease. The Michael Kors firm was incorporated\at the end of 2002. It is known as the global luxury company that is producing various fashion designs for many people especially the celebs. The company operates on three basis that is: silencing basis, retailing and wholesale. It also has many global store where its sales its products. The company strives to expend to other parts of the world as soon as a ready market target emerges. The many internal store help the company make a lot of revenue. There are over 2,497 department, 1233 departments are in the other parts of the world. ABOUT MICHAEL KOR’S FIRM History The Michael Kors firm was officially launched in 1981. It was associated with women ware. It was a Michael Kor’s initiative to start the business after dropping out of Fashion institute of technology only 5 months after enrolment. In 1993 the firm experienced bankruptcy, it later came back to feet four years later. A product of lower price was launched to help the firm recover from bankruptcy. The firm was known to be the first-ever producer of lady’s ready to wear designer. Michael- the owner launched a men’s wear in 2002 after parting ways with Celine to concentrate on his brands. In 2004, the firm lunched other collections like the Michael Michael collection and other new Kors brands. KORS brand was mainly footwear and jeans. There are many celebrities who have worn Kors design, they include: Jennifer Lopez, the first lady Michelle Obama in her first term office portrait, Heidi Klum and Catherine Zeta-Jones. During the academy award for the best actress of the year, Joan Allen had worn Kors gown when she was nominated for the award. Alicia Keys had worn Kors design during the inauguration of Barrack Obama in 2013. The firm has madea fortune in the fashion industry. In 2014, it had made 1 billion US dollars. This made the owner Michael Kors a billionaire in the fashion industry. The company is now a global enterprise, it has footwear in more than 95 countries in the world. Business strategy. The firm’s main aim is to increase the annual revenue and to strengthen and expand its international brand.Their many strategies put in place to make sure that the company has made progress in the right direction. The management teams is prepared to make sure that the advertisement reach many customers. For business to perform well it must have a good reputation in the market. The firm image portrait to one customer can either build or destroy it. It is because the customers recommend others to purchase at good stores, they also recommend their friends not to shop at a particular store. The major way of creating awareness is by doing the following: 1. By opening more retail shops across the world and in places having more customers. This will make the products readily available. It will increase the number of sales as the customers will have the chance to buy the goods from the new stores. More retailers will emerge to sell the products in their personal shops hence expanding the firm’s product awareness. 2. By increasing advertisements through various platforms like the press, fashion magazines, fashion related websites and other platforms. It is very important to have many advertisement channels which will reach the intended market. They help the customer know where to buy the product and by how much. Other advertisements give contact information where the customer can contact the center for inquiries. 3. Holding runaway shows twice year, it will be away of reinforcing the designers status in the market. Runways are always attended by many prominent people, it is through this they get to know good the products sold are. It is important to have a nice exhibition of the products in order to attract many customers to buy the firms products. 4. By Leveraging the manager international prestige and fame through various press programs.it helps customer know the designer’s products, they get ask question if any. It is way of raising the manager’s profile, the manager get the opportunity of making any announcing of arraival of a new product. Licensed products MichaelKor’s firm has a wide range of products it has been licensed trade. The products have been certified as safe. They meet the standards set, the products are of good quality to be imported by other country. The prices have also been certified as just, they don’t overcharge the clients. The following products are among the many products that the firm has been licensed to sell: 1. Watches: they have been licensed since 200 and are sold at the firm’s retail shops. The watches prices range between 150 and 500 us dollars each. This product can be purchased any of the stores found around the world. 2. Eye wares: they have been licensed since 2004. They offer wide vary of eyewear including sunglasses. They retail between us $ 80 and us $ 300. 3. Jewelry is also sold here after being licensed in 2010. The jewelry complement with the eyewear and watches. They can be sold as wholesale to the customers at price ranging from $20 to 120. 4. Fragrances were licensed in the 2003, exclusively for man and women. They can be sold as whole sale to the customers. They can be sold at a pricing ranging from $25 and $120. Michael Kor’smanufacturing and stocking The firm basically purchase finished from the contractor who acts as the third party. The contractor is responsible for the general manufacturing process. Purchasing of the raw material is done by the contractor, this is after a written agreement is made between the firm and the contractor. The firm selects a best agent who has the capability of making best products for the market. The agents are closely monitored by the firm’s representatives’ to make sure they make products that re of international standards. The products are made basing on the instructions sent by the designer. There are several agents in Europe, United States and Asia where these products are manufactured and sent to the firm. Competition The company faces very instance competition from other firms that produce products of the same category. The firm compete on basis of the style, customer, quality, recognition and other factors. It is always the companies’ strategy to make sure it produces products that will be out standing in the market. Al though there are some products find it difficult to give considerable competition, better products are always good. Restriction on imports All merchandised goods entering Europe, USA, Asia and Canada are always subjected to duties. There is also extra dusty subjected to a particular product in most of these countries. If a dumping case is suspected the product are subjected further to other levies. The firm’s products are subjected to regulations, they must be tested to certain the product safety. All the firm’s partners comply with the regulations to avoid paying extra amount. There is no extra charge that has been imposed on Michael Kors firm products as they meet the conditions set by the comply with the set regulations. In some cases the company makes a considerable loss as a result of extra duties, it makes the firm make a considerable loss. The firm is at times forced o sell products at a lower price in order to have an effect in the international market. Advertising and marketing The main marketing strategy of the company is to make sure that that the message is delivered to the right customers through various communication channels. The firm has a good advertisement team that creates advertisements to be aired on various platforms. The main aim of the advertisements is to create an awareness of the product being advertised. There is also team that is associate with public relations which helps in ensuring that the massage is very consistent all the times. About $41.7 million is set for advertisements in Northern America and other parts of the world. The advertisement is makes the firm have a global image in the market. They use the customer’s databases to set the best targets to advertise their products, the massage must reach as many customers as possible. The firm also uses other methods of marketing like using email, social media, catalogs and other ways fin order to reach as many customers as possible. Today the online store helps the firm reach more customers, they can purchase the product online and it will be shipped to them after they have made payment. A proper advertisements mechanism is very important for nay business to progress. It is always good to invest in marketing if the firm want to have more customers than those firms that doesn’t advertise. It is no always good to use the press only because there are other channels through which the massage can reach more people for the benefit of the company. 3. International financial analysis Risk associated with international markets. Since the firm operate on global basis, about 21% of the total revenue comes from countries that are outside the USA. There is a significant macroeconomic risk that arises from the economic and political instability of those countries. These risk include: increased fuel prices, unemployment in the country, currencyvolition and political tension during the time of election. This risk and others adversely affect the state of business in a direct way. The customers’ number might go down or some can choose not to buy specific products because of political constrains. Our products get affected directly affected in these markets hence the annual sales goes down by a big margin. Coping with competition in international markets. The firm faces intense competition from both the home –made and internationals’ accessories especially on apparel products and footwear. The major competitors include: Hermes, coach Prada, Burberry, Gucci, Chloe and other. The competition arises from a number of factors which doesn’t have limitations. Some of the competitors are more developed in the sector than Michael Kors firm. They have a lot of assets to invest in better technology, sales, advertisements, marketing, products distributions, manufacturing and others. As a way of competing affectively with these big firms, Michael Kors firm produces new and better products quickly. The prices are set to favor the firm at the same time the customers. New entrants who come in also give a considerable competition especially for the international markets that are very volatile. They reduce daily sales as some customers choose to buy from the new enterprise. The competition also changes the behavior of some customers therefore affecting the firm. The gross margin is affected when the prices change, the operation cost remains the same hence resulting in a considerable loss. The financial situation affects the business at large in case the situation doesn’t change, more money is spend other expenditures. The firm does the following key things as a way of maintaining their image in the market: 1. By having an anticipation and response to changing customer needs in timely way. They study the trend on the market to make sure they judge appropriately when particular products is to be sold and when is shouldn’t. 2. They establish and maintain a favorable brand name that the customers are familiar with. It is important to maintain a good image in the market. Changing the brand name can distract the customer, some might not buy the product as a result. 3. The firm determines and maintains the products quality. Many customer love products that show consistency, the products must also be of good quality. They ensure that the agents produce good products, the products must not have problems especially when used. 4. The firm maintains its key employees who have the experience required. Keeping key employers helps the firm to maintain its traditions. They improve on the ideas that are in place for the benefit of the company. They also have experience to handle the pressure imposed on the firm by the customers and other competitors 5. The firms maintains and allows the market share to grow. It is a way of improving the firm’s potential. It also helps in increasing the number customers because they get attracted. It is very important for any firm to do this if it wants to develop. 6. The firm produces quality products that appeases the customers. Customers love good quality products, if the products produced are of the best quality they will choose to buy them. In the fashion sector, customer buy products on basis of the quality. 7. The firm establishes a good relations with the retail customers. These customers sell products in the other parts of the world, they help the products to be sold in other parts of the world. They also play a key role in marketing the product to the clients because they are closer to more customers. It is important have a good relation with them in success is to be achieved. 8. The company sets the right pricing for all the products. This is the best way of attracting customers who don’t like overcharged. Setting the right price is important because the firm will make good profit from the sales as a result of the many customers who will come to buy the products. 9. By offering appropriate support to the retailers. They offer various services to the retailers to help the retail the products smoothly. By doing this they can make more sales per day therefore increasing the total amount of sales made in aday. If not supported a retailer might choose to concentrate on selling other products at the expense of the firm. 10. Through optimization of retail and supply chain potential. It is very important to do this if the business want to make any considerable profit. By setting the right procedure of retailing will help the business to progress. 11. The firm determines the size and location of a particular retail location. They also set the size of the retail shop. It is very important because they make sure that the retails shop is big, they make it in such a way it looks very classic and attractive. They attract more customers because most customers prefer shopping in a classic place. They makes sure that the shop is well declared both the interior and in the exterior. 12. Through protection of the intellectual property. It is way of safeguarding the firm’s image. Protecting intellectual property helps the firm safeguard its image and the quality of products they produce. Retails in various regionend of the fiscal year Region March 30 2103 March 31 2012 March 30 2011 North America $ 938,515 $ 573,394 $331,714 Europe 101,754 43,316 11,463 Japan 22,373 10,230 1,018 The wholesale sales at the end of the fiscal year March 30 2013 March 31 2012 March 30 2011 North America 913,145 544,686 386,566 Europe 118,970 65,474 27,039 Region March 30 2013 March 31 2012 March 30 2011 North America 86,975 65,154 45,539 ; Total revenue Year 2013 $2,181,732 2012 $1,302,254 2011 $803,339 The firm’s sale have been increasing each year, a result of new and better business plans that have been incorporated in the system. It is making profit each year as a result of the improved marketing programs that has been set up. The online platforms give the firm more advantage of buying more products though these platforms. The international market has increased due to online shopping. The buyers who can’t access the stores simply need to make online purchase to get what they want. Furthermore, this platform has created markets even in countries where stores doesn’t exist. 5. References 1. Joyce (8-17-2011 "Designer Michael Kors marries longtime partner". CBS News. Retrieved October 24, 2014. 2. Infomat Michael Kors Biography Infomat.com, September 10, 2009 3. Pezik, Anna (August 16, 2002). "Gwyneth Paltrow: Possession". CNN.com archive. Retrieved 9 February 2013. 4. Wilson, Julee (2013-01-22). "Alicia Keys Red Gown: Singer Stuns In Michael Kors Design At Inaugural Ball". The Huffington Post. Retrieved 9 February 2013 5. Andreoli, Richard (2005-02-01). "Working the runway: out designer Michael Kors tells it like it is to would-be fashionistas on Bravos Project Runway". The Advocate. Archived from the original on 2007-11-09. Retrieved 2007-06-20. 6. http://investors.michaelkors.com/files/doc_financials/annual_report/2013-Annual-Report.pdf 7. http://investors.michaelkors.com/financials/annual-reports/ Read More