Michael Kors just announced it quadrupled profits in the last year, homepage an amazing feat in the struggling economy. The brand utilized consumer one insight that helped it excel while aspirational competitors like Tiffany & Co. and Coach have struggled. Michael Kors succeeded because it was the first retailer to hit the market's sweet spot: people with money to spend but who aren't rich. Luxury marketing expert Pam Danziger calls these people HENRYs, for "High Earners Not Rich Yet." They are the people who make between $100,000 and $250,000, she says. HENRYs are a growing segment, while the wealthiest people are making less than they used to. Danziger explained the concept to us in an emailed note: Ultra-affluent (i.e. those at the top 2 percent of U.S
. households with incomes starting at $250,000) cut their spending by nearly 30 percent from 2010, while the HENRYs (High Earners Not Rich Yet with incomes $100,000-$249,999) increased their spending on luxury by some 11 percent from 2009 levels. Even though HENRYs individually have a far lower spending threshold than ultra-affluent customers, there are nearly ten HENRY households for every ultra-affluent. That is why with a total of 21.3 million households, the HENRY segment is a critically important part of the consumer market. With Michael Kors' $450 handbags and $250 watches, HENRYs can show off their success without feeling like they're going overboard Michael Kors Outlet Store. Kors, like his competitor Tory Burch, wisely chose the right audience. It's paying off.
High quality global journalism requires Michael Kors Outlet Store investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email firstname.lastname@example.org to buy additional rights. Michael Kors, the upmarket handbag and fashion brand, has unveiled plans for a secondary public offering on behalf of investors including the company's founder just 14 months after its initial public offering. The announcement on Wednesday of an SEC filing came just one week after Michael Kors reported a record share price of $62.77. The Hong Kong-based company floated in December 2011 when shares were priced at $20. As of February 13 the company had about 200m ordinary shares, both issued and outstanding. The offering will involve the sale of 25m ordinary shares, with Morgan Stanley, JPMorgan and Goldman Sachs acting as bookrunning managers. Sportswear Holdings Limited, the Hong Kong private equity firm which purchased a controlling stake in Michael Kors in 2003, is set to decrease its interest in the company to 5.8 per cent. Founder Michael Kors is selling 3m shares, leaving the 54-year-old designer with a 2.4 per cent stake. A trust for the children of chief executive John Idol will sell 2m shares. The company said Michael Kors Holdings would not receive any proceeds from the sale by investors. The share price fell by more than 5 per cent as the market reacted to news of the offering by some of the company's biggest investors . “This move undoubtedly sends a very negative signal,” said Brian Sozzi, chief equities analyst at NBG Productions . “Last week's earnings call implied that stock would continue to soar – if this is the case then why the decision to have cash in hand over shares? It doesn't quite add up.” Some rivals within the accessible luxury sector have seen a slowdown in sales in recent months. However, Michael Kors has produced exceptional growth while announcing consolidation of its international presence, new store rollouts and increased wholesale distribution throughout its core US market. Mr Sozzi said that given the company's clear growth potential, many analysts would continue to see the brand as a buying opportunity, while maintaining a close eye on market fluctuations following completion of the offering. The share price record view homepage came after a 70 per cent jump in third-quarter revenue to $637m.