Mezzi: Own the bag but don't be left holding the bag.

Jenni Avins & TSX10BAGGER
May 31, 2015
2 min read

Fashon is about style a popular trend, especially in styles of dress and luxary handbags are the perfect symbol of this in the realm of fashion accessories.

Michael Kors, the American manufacturer of brightly colored leather handbags, gold-embellished accessories, and cotton caftans, spooked investors yesterday (May 27) with a quarterly earnings report containing a rare miss on sales.

The market was mainly focused on the news that sales at stores open at least a year had fallen 5.8% from the year-ago quarter. This included a 6.7% decline in North America, the brand’s biggest market.

That said, it doesn’t take an analyst (or even a fashion snob) to see that the brand’s clothing and accessories—and stores—are everywhere. In absolute dollars, Kors is a juggernaut. The brand reported sales in excess of $1 billion for the fiscal quarter ended March 28.

But now, those sales are slowing down, bringing to mind the apocryphal Yogi Berra saying: “Nobody goes there anymore. It’s too crowded.”

Catering to the “basics” is a strategy, to be sure, but it’s a dangerous one for a brand that has posed itself as an aspirational American sportswear label. While Coach—which shares a price point and mainstream American aesthetic with Kors—is closing its less lustrous stores in shopping malls in an effort to regain a bit of the Coach brand’s luxury sheen, Kors has been doing just the opposite.

Kors CEO John Idol defended the brand’s inclusive, mass approach in August of last year, and new store openings reflect that strategy. In the fiscal year ended in March, Michael Kors opened 121 retail stores, bringing its total to 526; it will be interesting to see if sales can catch up with the expansion. ` Jenni Avins

If the juggernaut is waning in sales what makes the start up Mezzi Holdings (MZI) any less susceptible to the slowing market? KORS has declined from over $62.00 to the$46.50 in the month of may. If that wasn’t enough to worry about Robert Withers has left the board and Raif Adelberg has resigned as President and Chief Designer/Creative Art Director, effective May 28, 2015. Over the past year, Mr. Adelberg applied his talent and expertise in the fashion industry to assist in the development of MEZZI's line of handcrafted leather accessories. The Company thanked Mr. Adelberg for his service as he stepped down from the Board of Directors and resigned to pursue other ventures.

How do you leave to pursue other ventures when this is still in the start up phase? I see this as strong issue and warning sign to tread carefully. New York-based designer, Kevin Costello, was added as its head accessories designer along former Indochino executive, Jennifer Clarke, as its Chief Operating Officer strong additions but they may not be enough to save this. The charts say buy but use caution because in the end the market wasn’t buying Michael Kors.