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Michael Kors Plans Retail Rollout

Collection stores planned for Palm Beach, Chicago and Milan.

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NEW YORK — Michael Kors’ Collection world is growing in leaps and bounds.

The designer is embarking on an ambitious retail rollout that will mark his first European store in Milan, Collection boutiques in Palm Beach, Fla., and Chicago, an expanded store at the Americana in Manhasset, N.Y., and several shop-in-shops nationwide.

The Milan unit will also kick off a European retail strategy with plans to open 25 Collection stores across the continent over the next three years.

“With so much negative talk going on about the state of fashion and the state of the economy, our business is really strong right now,” Kors said Tuesday. “Particularly when we open a store in a city, not only do we do a lot of business, but we also see that the business gets better with existing stores [that sell Collection] in that city.”

On Sept. 23, Kors is scheduled to open a 1,100-square-foot-boutique at 14 Via Sant’Andrea in Milan, having taken over the flagship space from Victor & Rolf. The store will be opened in a collaboration with Gibo, which produces Kors’ designer sportswear collection.

The company will also open a 2,400-square-foot-boutique at 226 Worth Avenue in Palm Beach this November, followed by a 2,400-square-foot store on the ground floor of the 900 North Michigan Shops mall on Michigan Avenue in Chicago in fall 2009.

“With Palm Beach, I feel like it’s a homecoming,” said Kors. “A lot of people look at me and say, ‘You don’t have a store in Palm Beach?’ So much of our clientele spends a good part of the winter season there. It’s really our first resort store. I have always loved designing resort and things that have a resort mentality, and Palm Beach is one of the few places left on earth where a jeweled $800 bikini is a basic.”

Chicago, he added, has been a supportive market from the start. “For me, it’s always been a city wrapped in great taste, from the way people live and the architecture of the city,” Kors said. “I am a camel hair and gray flannel kind of guy and Chicago is a camel and gray flannel kind of town.“

In addition, Kors has taken over the Hermès unit next to its existing Collection store at the Americana in Manhasset, and will increase the boutique’s footprint from 1,200 square feet to 4,000 square feet when it reopens this September. Hermès recently relocated to a larger space at the mall.

The openings will bring the number of Collection boutiques to seven, including the Madison Avenue flagship in Manhattan, and stores on Rodeo Drive in Beverly Hills, and in Seoul, South Korea.

The openings are part of a two-tiered retail expansion strategy, with additional Collection and lifestyle stores that offer a mix of Collection and Michael Michael Kors apparel and accessories and Kors footwear, with a concentration on accessories. The company currently has 31 lifestyle stores, and plans to have 45 before the end of the year. The strategy is to have 75 such stores by the end of next year, with a target of 100 lifestyle stores in the U.S.

“The Collection stores reinforce the vision of the brand that Michael has stood for 27 years, and they are very successful retail vehicles for us,” said John Idol, chief executive officer of Michael Kors Inc. “They generally average between $1,500 and $2,000 [in sales] a square foot. This is not something we do that is just for a lively presentation to the world. We are very profitable with these stores.”

As for future retail expansion Stateside, Idol said the company is targeting several more locations, including San Francisco, Boston and Dallas. There are also currently 10 in-store environments, and the strategy is to build 26 more in the next two years in such stores as Neiman Marcus, Nordstrom and Saks Fifth Avenue.

The openings come at a time when several retailers agreed the Kors business is healthy, especially considering the tough overall climate.

“We are pleased with our customers’ response to the Michael Kors Collection, which we offer in 13 of our stores,” said Michael Fink, Saks’ vice president and women’s fashion director. “We have worked with Michael Kors to develop a growth strategy for the business, and we are excited about the potential for continued growth. The line is well priced, and Michael Kors has a great sensibility for fabric weights and seasonality and has a keen understanding of our customer’s lifestyle.”

Ken Downing, senior vice president and fashion director at Neiman’s, said, “The collection is doing well, and the customers have responded to the pre-fall collection very enthusiastically.

“It’s the right collection right now for our customer, and newness comes in the slender sleeker silhouette he is playing with, and the customer is hungry for right now,” Downing added. “He has amazing colors, terrific shapes, and we are optimistically enthusiastic about the performance for resort.”

According to Idol, the strength of the Collection business is offering a platform to expand the retail network.

“We have plans to open in all the major cities, including London, Paris and Milan, in the next three years,” Idol said. “London is the next high priority. Then it will depend on the availability of the best street, whether it’s a street location or inside of a mall. We’d rather wait than go into the wrong location.”

And despite a difficult economic environment, Idol said the timing was right to make this retail push now — five years after he, Lawrence Stroll and Silas Chou partnered in the business.

“The first year and a half of our major launch of Michael Kors, we were finding our way, understanding what worked for us, what didn’t work for us and how we could accelerate the business,” said Idol. “After we had the Americana and Rodeo Drive stores open for a few years, we recognized that these stores could be extremely profitable and we could open more. Our business in Europe has been so good that we thought we can be successful with freestanding stores there as well.”

In Europe, Collection is sold in approximately 125 distribution points, including Harrods and Harvey Nichols in London, Printemps in Paris and Tsum in Moscow. To support the European growth, the company opened corporate offices in Lugano, Switzerland, and is planning to open a press office in Milan in the existing Gibo sales showroom next February.

“For a long time, people talked about fashion being global but, until very recently, for many people American fashion was always about jeans and T-shirts,” Kors said. “Now we really see the customer today who is sophisticated and doesn’t really care if it’s French, British or American. She knows what she likes, and while it’s personally exciting for me to plant our flag in Europe, it also shows how the perception of American fashion changed around the world.”

Kors, for one, won’t be needing to brush up on his Italian. “I speak perfect fashion Italian, so I can do the trunk show and probably do all of my selling in Italian, but I don’t know if I can dish the dirt,” the designer said.

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