Another day, another merger. On Tuesday, the world awoke to news that Michael Kors Holding Ltd. would be purchasing footwear label Jimmy Choo PLC for 896 pounds — roughly $1.2 billion. This appears to be the latest trend in retail — major names combining their prowess (and products) for maximum impact. In May, Coach acquired both Kate Spade and Stuart Weitzman, news that its most loyal consumers had many feelings about; rumors that it would also be buying Jimmy Choo circled the Internet.
Former British Vogue editor Tamara Mellon cofounded Jimmy Choo in 1996 with Malaysian cobbler Jimmy Choo — in the past 20 years, it secured its status as one of the most popular (and best selling) footwear brands, becoming a favorite on and off the red carpet. Mellon left the company in 2001, and in 2014 it went public (the first luxury shoe brand to do so). The company's owners, Luxembourg-based JAB Holding Company, put the shoe brand up for sale back in April (to focus its attention on its collection of coffee brands), and now, here we are.
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"We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury brand,” John D. Idol, Michael Kors' chairman and chief executive, said in a news release. "Jimmy Choo is known worldwide for its glamorous and fashion-forward footwear. The company is a leader in setting fashion trends. It's innovative designs and exceptional craftsmanship resonate with trendsetters globally. We believe that Jimmy Choo is poised for meaningful growth in the future and we are committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years."
Michael Kors plans to keep Jimmy Choo’s current management team but will open new Jimmy Choo retail stores and expand the brand's digital strategy. It's an interesting move, considering the Kors brand, in recent months, has seen its stock fall to the lowest its been in five years, and has announced it would be shuttering 100-125 of its brick-and-mortar shops.
Per Bloomberg, Luca Solca, an analyst at Exane BNP Paribas, said: “Again, Michael Kors follows the path of Coach — and again, on steroids. After a meteoric rise and spectacular crash, it is now the time to recycle cash into other brands.”
What we're wondering: Does this mean Choo will add lower-priced (read: more accessible) shoes to its product range? Or perhaps Kors is banking on a wealthier, more luxury-minded consumer to turn its business around? Either way, we'll be watching.