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Luxury fashion brand Michael Kors to buy shoemaker Jimmy Choo for $1.2 bn

Buyers abroad take advantage of a drop in value of sterling since Britain voted to leave EU in 2016

Reuters  |  London 

Michael Kors

US retailer has agreed to buy luxury for $1.2 billion, snapping up a British company whose towering stilettos have been made famous by celebrity customers from Princess to Kendall Jenner.

The move comes two months after rival handbag maker Coach struck a deal to buy quirky fashion brand Kate Spade & Co, as so-called affordable luxury look to go into new markets to try to boost flagging sales.

"is an iconic premier that offers distinctive footwear, handbags and other accessories," said Michael Kors, honorary chairman and chief creative officer.

"We admire the glamorous style and trend-setting nature of designs."

Founded by bespoke in the east end of in the 1990s, Plc listed at 140 pence in 2014 and will sell out at 230 pence.

Its strong performance stands in contrast to which has lost 65 per cent of its market value since 2014 due to fierce competition at the more affordable end of the luxury market and a drop in customers at department stores.

Michael Kors, which has tried to fight back by expanding into dresses and menswear and its online business, said in May that sales at stores established for more than a year fell 14 per cent in its fiscal fourth quarter.

Under the terms of the deal, it will pay a premium of 36.5 per cent to buy compared with the British firm's share price before it was put up for sale.

The company makes three quarters of its revenue from selling shoes and has a presence across the world, including around 150 company-operated retail stores.

Multi-brand strategy

Berenberg analyst Zuzanna Pusz said the deal followed in the footsteps of Coach's recent acquisition and showed US accessible luxury were pursuing the multi-brand strategy found in Europe, where cash flows from one large brand are reinvested into smaller but faster growing ones.

Pusz said it was probably a sensible move in the long term, with competition unlikely to wane anytime soon.

"Multiple such as Jimmy Choo, Prada, Ferragamo, and Cucinelli have gone public over the past couple of years with the intention of financing their retail expansion plans, thus accelerating their investments and giving the luxury consumer globally more choice of brands anywhere they go."

put itself up for sale in April after its majority-owner JAB, the investment vehicle of Germany's billionaire Reimann family, signalled its intention to focus on consumer goods instead. JAB is also considering a sale of Bally International, the Swiss luxury shoes and accessories company.

The deal is the latest in a string of foreign takeovers of UK companies, as buyers abroad take advantage of a drop in the value of sterling since Britain voted to leave the European Union in June 2016.

Michael Kors, which said it had JAB's backing for the deal, pledged to use its own infrastructure to help grow further via store openings and online.

will continue to be led by the same management team, including Creative Director Sandra Choi who joined the company at its inception.

Goldman Sachs and JP Morgan acted for on the deal, while Merrill Lynch, Citigroup, Liberum and RBC Europe acted for

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, July 26 2017. 08:31 IST
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