Michael Kors snags luxe shoe brand for $1.3 billion

Michael Kors expects its newest acquisition to give it a stronger hold in the luxury sector.



The brand, which built its reputation on lines of high-end apparel, handbags, shoes and fashion accessories, has acquired luxury shoemaker Jimmy Choo for approximately $1.350 billion (USD). The transaction, which is expected to close in the fourth quarter of 2017, has been approved by the boards of directors of both Michael Kors and Jimmy Choo.



Through the agreement, Pierre Denis will continue in his role as CEO of Jimmy Choo. He has led the company since 2012, during which time brand experienced compounded sales growth of 11% annually. Denis brings more than 25 years of experience, and a strong track record with global fashion luxury brands.



“Jimmy Choo is known worldwide for its glamorous and fashion-forward footwear,” said John Idol, chairman and CEO of Michael Kors. “We believe that Jimmy Choo is poised for meaningful growth in the future, and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years.”



The brand is a natural fit for Michael Kors’ luxury group. Besides offering high-end footwear, it also features luxe handbags and other accessories. The deal also marks the first time that Jimmy Choo has been owned by a company with expertise in fashion, according to The New York Times.



“We are convinced that there is so much more that can be delivered in the years ahead,” said Jimmy Choo’s Denis.



“We look forward to working closely with the leadership and team at Michael Kors Holdings Limited to further develop our iconic brand. Our two companies share the same vision of style and trend leadership,” he added. “Our luxury heritage is the foundation of Jimmy Choo and we will continue to bring our brand vision to consumers globally.”



Michael Kors’ acquisition of Jimmy Choo also coincides with its efforts to rebuild its brand and transition to long-term growth. Among the most recent initiatives the company has taken to achieve its goal includes shuttering between 100 and 125 of its full-price retail stores over the next two years. The company operated 827 stores as of the end of the fiscal first quarter.



“Looking ahead, as we expand the fashion innovation in our accessories assortments, right-size our store fleet and elevate our store experience, fiscal 2018 will be a transition year in which we establish a new baseline before returning to long-term growth,” Idol reported.



The deal comes on the heels of Coach’s recent announcement that it will acquire Kate Spade & Company. The acquisition, which has a total transaction value of $2.4 billion, is expected to close in the third quarter of 2017 and add to adjusted earnings in fiscal 2018.



Similar to the expanded exposure that Michael Kors’ deal will deliver in the luxury customer base, Coach’s agreement gives it the opportunity to fuel momentum among younger consumers.