Michael Kors is trying to shore up declining demand for expensive handbags, and says it aims to double the annual sales of the smaller footwear and accessories brand.
Luxury fashion brand Michael Kors says it has reached a deal to acquire footwear and accessories brand Jimmy Choo valued at nearly $1.2 billion.
The boards of both companies have approved the deal, which is expected to close in the fourth quarter of 2017.
Michael Kors is „trying to shore up declining demand for expensive handbags, “ NPR’s Yuki Noguchi tells our Newscast unit. Here’s more from Yuki:
Michael Kors said in May that „sales at stores established for more than a year fell 14 percent in its fiscal fourth quarter, “ according to Reuters.
Jimmy Choo announced that it was up for sale in April, the wire service reported, „after its majority-owner JAB, the investment vehicle of Germany’s billionaire Reimann family, signaled its intention to focus on consumer goods instead.“
In a conference call, Michael Kors CEO John D. Idol said that he believes Jimmy Choo „can more than double its sales to $1 billion annually.“ The two brands will continue to operate „very independently, “ he added, but will together comprise a „global fashion luxury group.“
The acquisition is aimed at diversifying the company’s product offerings, particularly in terms of men’s footwear, which Idol described as a „hidden jewel.“
Pierre Denis, the CEO of Jimmy Choo, said in a statement that „our two companies share the same vision of style and trend leadership.“
Michael Kors executives touted the geographic diversity of Jimmy Choo stores. And, Idol added that „from a luxury standpoint they are one of the under-penetrated companies in terms of retail locations in the world compared to the other luxury competitors, “ stressing that the was room for expansion.
Expansion could be dangerous, however, as Bloomberg columnists Chris Hughes and Shelly Banjo wrote: „The risk for Kors is that it devalues the legacy it has acquired.“
Two months ago, another major luxury acquisition was announced — Coach said it is purchasing Kate Spade in a $2.4 billion deal.
