Michael Kors Bought Jimmy Choo for $1.2 Billion and is Likely to Buy Another Luxury Brand Soon
Michael Kors Bought Jimmy Choo in a $1.2 billion deal and is likely to buy another luxury brand soon, according to its CEO.
As of July 2017, Jimmy Choo has a new owner. On Tuesday Michael Kros has bought the luxury shoemaker in a deal of approx. $1.2 billion. Adding the coveted global band to the US’s retailer’s stable as its own handbag and accessory sales suffer.
This year we’ve seen a lot of famous brands bought by others because their sales have reached a new low in recent years.
Mostly because they can no longer face competitors many brands chose to sell instead of going bankrupt.
First, Michael Kros decided to offer heavy discounts to people but only managed to give them a reason to not pay full price and dismiss the brand’s cachet.
As expected, their sales have taken a nosedive, declining 11% in the latest quarter.
They are also in the process of closing 100 to 125 of its standalone stores, and renovating other 100-plus stores.
People believe that it would rein in its sales and sell fewer items to department stores, hence they need to marking down items in order to move inventory.
But with this new acquisition, Michael Kros will have a new way for international growth and a foothold in the luxury shoe market.
“We admire the glamorous style and trend-setting nature of Jimmy Choo designs,” said Michael Kors, honorary chairman and CEO, in a statement.
British Vogue editor Tamara Mellon and designer Jimmy Choo started the company in 1996.
As a stilettos retainer, which often cost more than $1,000, the company quickly became a favorite among celebrities like Sarah Jessica Parker and Princess Diana.
What is going to happen after this deal?
Jimmy Choo will continue under the same CEO Pierre Denis, which has held the job since 2012, who previously served as an executive for LVMH.
With more than 150 stores around the world, we are quite sure this isn’t the end of Jimmy Choo.
“We expect more consolidation in this market, with more ‘affordable’ luxury houses looking to upscale,” said Jonathan Buxton, head of consumer and retail at Cavendish Corporate Finance.
Shares of Michael Kors edged up 1% in pre-market trading, while shares of Jimmy Choo surged 17% in London.
What is next for Michael Kros?
According to Michael Kros’ CEO, ‘This will not be the last acquisition’.
Michael Kors is focused on forming a “luxury group,” CEO John Idol tells CNBC after announcing plans to acquire shoemaker Jimmy Choo.
What do you think about this deal? Let us know in the comments below!
** Find out if Jimmy Choo is in the list of the worlds most expensive shoes for women: