Michael Kors recently entered into a deal to acquire upscale shoe brand, Jimmy Choo. The purchase was said to worth around $1.2 billion.
On July 25, via press release, John D. Idol, CEO of Michael Kors stated, “We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury brand.”
Kors added that they see the London-based Jimmy Choo as an ideal partner to work with. A firm that they can bolster through further development.
“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,” the fashion magnate said.
Michael Kors Holdings also revealed that although the shoe company would be turned over to the MK brand, Pierre Dennis and Sandra Choi are staying and will retain their positions as CEO and lead designer, respectively.
Prior to the sale, it was learned that JAB Holding, a company run by the German billionaire Reimann family, owns 70 percent of Jimmy Choo and it has been looking for buyers so they can leave the luxury fashion trade and focus more on the coffee and food business.
At any rate, Jimmy Choo is one of Britain’s well-known fashion brands and it was launched in 1996. However, after two decades, it experienced a steep decline in profits so it was put up for sale in April.
The high-end fashion market has been struggling in recent years due to consumer’s shift in preference, from luxury labels to discount stores. Because of this changes, the company’s sales in 2016 plummeted from £19.4 to just £15.4 million.
Consequently, Jimmy Choo pulled out from some department stores and closed down many of its boutiques. The decision to take out the products from department stores was due to exclusivity issues. Just like Calvin Klein and Ralph Lauren, Jimmy Choo has scrambled to preserve its brand image after distributing its goods in malls and discount stores, Bloomberg reported.
On the other hand, Michael Kors also suffered financially as it incurred losses after its rapid expansion effort. The decrease in sales led to the closure of around 125 retail stores. Now, Michael Kors’ purchase of Jimmy Choo is expected to create a new channel for the company to bounce back and grow further.
Finally, the deal between Michael Kors and Jimmy Choo is set to close in the fourth quarter of 2017.
[Featured Image by Dimitrios Kambouris/Getty Images for Michael Kors]