Business Intelligence on Retailing, Franchising, and Consumerism in China

Michael Kors Buys Back Franchising Rights In Greater China For USD500 Million

American light luxury brand Michael Kors has invested USD500 million in the acquisition of Michael Kors (HK) Limited, the exclusive licensee of Michael Kors in China and certain other regions in Asia.

Over the 12-month period ended March 31, 2016, Michael Kors' total operating revenue in Greater China was USD197 million. Its sales network covered 91 retail stores and six tourism retail stores in mainland China, Hong Kong, Macau, and Taiwan. In the 2017 financial year, Greater China region is expected to contribute about USD200 million to the company's net retail sales.

Greater China has become one of the most important potential markets for Michael Kors. By the end of the third quarter, Michael Kors' performance in the Chinese market increased by at least 20% year-on-year.

John D. Idol, chief executive officer of Michael Kors, said that over the past few years, the company worked together with its Greater China licensee to lay a foundation, establish the brand, and enhance the brand's awareness in the Chinese market, which helped the company achieve strong development in this marketplace. Now the company will integrate this regional business and explore the huge growth potential of the market.

Michael Kors said they will accelerate product line updates, maintain the exclusivity of their products by strict management of wholesale distributors, and promote sales by entering the e-commerce sector.

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