US designer, Michael Kors will in a matter of time buy up luxury shoemaker Jimmy Choo for $1.7 billion as it looks to find new avenues for growth amid
US designer, Michael Kors will in a matter of time buy up luxury shoemaker Jimmy Choo for $1.7 billion as it looks to find new avenues for growth amidst a slowdown in its core handbag business. This buy up will afford Michael Kors a foothold in the fast growing luxury shoe business
Jimmy Choo put itself up for sale in April after its majority-owner JAB, the investment vehicle of Germany’s billionaire Reimann family, signaled its intention to focus on consumer goods instead. And Michael Kors has said that it has JAB’s backing for the deal and pledged to use its own infrastructure to help Jimmy Choo grow further via store openings and online. Jimmy Choo will continue to be led by the same management team, including Creative Director Sandra Choi who joined the company at its inception.
The deal is the latest in a string of foreign takeovers of UK companies, as buyers abroad take advantage of a drop in the value of sterling since Britain voted to leave the European Union in June 2016. It also comes two months after rival handbag maker Coach, struck a deal to buy quirky fashion brand Kate Spade & Co as luxury companies look to go into new markets to try to boost flagging sales.
Jimmy Choo Plc listed at 140 pence in 2014 will now sell out at 230 pence. The company makes three quarters of its revenue from selling shoes and has a presence across the world, including around 150 company-operated retail stores. Its strong performance stands in contrast to Michael Kors which has lost 65 percent of its market value since 2014 due to fierce competition at the more affordable end of the luxury market and a drop in customers at department stores.
Michael Kors, which has tried to fight back by expanding into dresses and menswear and its online business, said in May that sales at stores established for more than a year fell 14 percent in its fiscal fourth quarter. Under the terms of the deal, it will pay a premium of 36.5 percent to buy Jimmy Choo compared with the British firm’s share price before it was put up for sale.
A British company, Jimmy Choo which began in the 1990s is an iconic premier luxury brand that offers distinctive footwear, handbags and other accessories. Its towering stilettos have been made famous by celebrities all over the world.
“Multiple companies such as Jimmy Choo, Prada, Ferragamo, and Cucinelli have gone public over the past couple of years with the intention of financing their retail expansion plans, thus accelerating their investments and giving the luxury consumer globally more choice of brands anywhere they go.”
