Luxury brand Michael Kors plans to roll out same-day delivery of online orders in certain U.S. cities in the near future.
On Michael Kors’s Q4 2016 earnings call, CEO John Idol told analysts the company doubled its online sales in North America year-over-year during the year though he didn’t specify a dollar figure or what percentage of overall sales online now accounts for. Michael Kors, No. 375 in the Internet Retailer 2016 Top 500 Guide, does not break out online sales in its quarterly earnings reports. According to Top500Guide.com, Michael Kors did an Internet Retailer-estimated $52 million in online sales in 2015.
The company credited e-commerce as being the primary driver of a $43.2 million year-over-year sales gain in the fourth quarter in its retail net sales division, which includes revenue from its 668 retail stores globally and its website.
Idol told analysts that with online sales growing so quickly, the company intends to roll out same-day delivery service in time for the 2016 holiday shopping season.
“We can ship from store today, but we’re talking same-day service and obviously we’ll start it in New York; there’s nothing highly secretive about that,” he told analysts on the call, according to according to a transcript from Seeking Alpha. “We’re putting together the final touches on that. I can’t give you the exact dates that’s going to start, but we’ll see how that works. We’ll see if it really provides a lift to the business that will generate profitability.”
Same-day service will be free for shoppers and will eventually be offered in other U.S. cities, Idol said, though he didn’t specify locations. A representative for Michael Kors did not return a request for comment. Luxury retailer Barneys New York Inc. (No. 168 in the 2016 Top 500) already offers same day delivery in Manhattan and parts of Brooklyn.
Online sales are increasingly important to Michael Kors’ overall revenue, and the ability to offer same-day delivery of online orders is a step toward improving customer satisfaction, Idol said.
“We know [shoppers are] beginning their journey online, and ultimately we’re still doing 90 plus percent of our business in North America in stores. So stores are still real. And while one day, I publicly said we’ll get to 25%-30% of our business in e-commerce, we’re nowhere near that today.”
For the fiscal fourth quarter ended April 2, Michael Kors reported:
- Total retail net sales, including e-commerce, of $572.6 million, up 22.0% from $469.4 million last year.
- A retail comparable sales gain of 1.5%.
- Retail net sales in the Americas region of $407.9 million, up 13.4% from $359.7 million.
- Net sales of $1.163 billion, up 11.8% from $1.040 billion.
- Net income of $176.3 million, down 3.5% from $182.6 million.
For fiscal 2016, Michael Kors reported:
- Total retail net sales, including e-commerce, of $2.395 billion, up 12.2% from $2.135 billion last year.
- A retail comparable sales decline of 0.9%.
- Retail net sales in the Americas region of $1.779 billion, up 7.4% from $1.656 billion.
- Net sales of $4.539 billion, up 8.1% from $4.200 billion.
- Net income of $837.7 million, down 4.9% from $881.0 million.