“We value our relationship with Michael Kors and hold them in the highest esteem,” Pete Nordstrom, copresident of Nordstrom Inc., told WWD exclusively, responding to a flurry of reports and inquiries over the past few weeks that the Seattle-based retailer was dropping or reducing its commitment to Kors.
“They have been good partners over the years and we plan on carrying their product in select stores and online,” Nordstrom said.
The speculation was fueled by a research report from Wedbush Inc. that stated “nearly one-half of Nordstrom stores eliminated Kors handbags during May.” Wedbush said its researchers spoke with 112 Nordstrom handbag managers in the U.S. and Canada, and 54 stores said they stopped carrying Michael Michael Kors handbags during this month. Wedbush is a financial services and investment firm with various holdings providing private and institutional brokerage, investment banking, asset management, research and other services.
Wedbush also said in its report that five Nordstrom stores were eliminating the brand and that their sources heard that 60 stores in total were eliminating the brand by June. The report cited “waning interest from customers as well as Macy’s constant discounting of Kors’ product” and contended that Michael Kors was the number-one returned handbag brand because of “poor craftsmanship.” According to Wedbush, seven of 36 Nordstrom stores that carried the Michael Kors Collection bags line said they would not be carrying it going forward. The report cited several other brands that would take some of the Kors space in Nordstrom doors, like Coach and Kate Spade, and that Nordstrom’s “pull back on Kors raises more concerns about brand equity.”
But Dan Evans, a Nordstrom spokesman, refuted some of the contentions and research methods in the Wedbush report, telling WWD, “We became aware that a financial analyst used information they received from calling our stores — they said more than 100 — to write a report that included speculative information about our relationship with Michael Kors. The research was conducted with Nordstrom department managers who do not have the full context of our long-term business strategy with our brands and therefore wouldn’t be able to speak to our strategy or future plans on behalf of the company.”
Evans emphasized, “We have no plans to end our relationship with Michael Kors. While we don’t know how the handbag returns information was gathered [listed as “other sources” in the report], we have not experienced any unusual quality issues with Michael Kors handbags.
“Just like we do with any vendor, we will continue to partner with Michael Kors to ensure that we offer product that meets our customers’ needs. This process includes new future opportunities and, when necessary, adjusting and editing our current selection. While we typically don’t speak to the relationships we have with our brands, we felt it is important in this case to present the facts.”
The author of the report, Lupine Skelly, retail equity research analyst, told WWD the methodology to find out if a store is carrying a product or not is “pretty black and white….If a product is in a store or not, you can’t dispute that.” Still, she added that it is fair to say department managers don’t necessarily know the future plans for a brand.
“My take was not that this is a complete elimination of the brand [from Nordstrom stores], but that it is a massive reduction of the sku count reflecting that Michael Kors is coming out of favor with higher-end consumers.” Skelly also said she felt there were other reports that took her research and “blew it out of proportion” and understood Nordstrom’s concerns over that.