Michael Kors is on the way out, or at least that’s what some analysts are saying after a disappointing earnings report. The designer of high-end handbags and watches was the darling of fashion just one year ago, but now the interest in the designer goods is starting to wane.

The brand has become diluted.

Like many other aspirational brands, Michael Kors tried to reach too many customers too quickly and essentially ate up its own profits by selling goods at multiple price levels through outlets and other discount malls. Other luxury brands like Coach, Ralph Lauren, Tommy Hilfiger and even Jordache have experienced similar falls from grace.

Losing Market Share

Retail is always a bit of a rough ride for most brands. Customer preferences change like the wind, and staying on top of the industry’s wishes and desires can be a challenge. It’s hard to blame Michael Kors for trying to market its product so aggressively, but ultimately their short-term selling strategy affected their long-term profits.

An aspirational brand like Michael Kors is only impressive because not everyone has a Michael Kors. The bags and accessories were originally sold in finer department stores and in brand stores. Then the company expanded into three different price points: the original high-end department store brand, a middle-market brand and a brand sold through heavily discounted outlet stores.

And that is the problem.

Falling Out of Grace

Why would a budget-savvy customer pay $300 for a bag when she can head a few miles down the road and buy what amounts to the same bag for half the price, or even less? With those inexpensive bags so readily available, how would the fashion-minded show off an expensive luxury purchase that no longer seems quite so luxury?

To add to their problems, this site has been getting numerous complaints about the quality of the merchandise and the quality of the Michael Kors staff. Expensive handbags are falling apart and customer service doesn’t care. $340 watches are fading and tarnishing and the sales representative literally turns her back on the customer and walks away. One reviewer even had security called on her after asking about the price of a bag and being insulted by the sales clerk.

This is a company that might survive if it creates and sells quality products that customers will still want after the trendy popularity they are experiencing has faded. But things aren’t looking very good right now.

In essence, too many people can afford the Michael Kors brand now, the flaws in the merchandise are starting to show, and soon nobody will want it.

Well, perhaps not nobody. After all, Jordache and Tommy Hilfiger are still sold in department stores. Their merchandise is still being sold to someone, and Michael Kors will likely follow the same pattern of shuttering stores, losing profits before stabilizing and eventually finding a new place in the market many, many rungs down the luxury ladder.

Michael Kors Reviews: