Michael Kors to Buy Jimmy Choo for $1.2B
Michael Kors Holdings said this morning that it has agreed to buy the shoe company Jimmy Choo for 896 million pounds, or about $1.2 billion, the latest push by an American high-end fashion house to find sources of growth in an increasingly competitive retail landscape. Michael Kors said it expected to open new Jimmy Choo retail stores and expand its fashion offerings. It also plans to develop Jimmy Choo’s online presence. After the sale to Michael Kors, Jimmy Choo will continue with its current management team.
Total Retail's Take: Michael Kors has struggled in recent years with declining sales and profits, and earlier this year announced it would close up to 125 of its full-price retail stores. Its share price has lost a fifth of its value in 2017. It was time for Michael Kors to take action to reverse this downward trend. With the acquisition of Jimmy Choo, Michael Kors will be entering the higher end of the luxury market, and going after a new customer demographic. Michael Kors’ products are typically found in outlet and department stores, where discounting is commonplace, while Jimmy Choo's products sell at a higher price point to customers at the top of the luxury market. Michael Kors is betting on the world's wealthy to get it out of its current rut.