Luxury fashion brand Michael Kors has reached a nearly $1.2 billion deal to acquire footwear and accessories brand Jimmy Choo.
The deal has been approved by the boards of both companies and is expected to close Q4 2017.
Michael Kors is “trying to shore up declining demand for expensive handbags,” NPR’s Yuki Noguchi tells our Newscast unit. Here is more from Yuki:
“The main product that built the Michael Kors fashion empire is handbags. But intense price competition and declining demand has cut into that luxury market. The Kors brand helped further that trend by selling a good portion of its wares in department stores, which heavily discounted prices, making it difficult to get customers to buy their products at full price. By buying the Jimmy Choo brand, the company is hoping to capitalize on increasing sales for high-end shoes.”
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 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 make up 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.”
Hopefully we’ll end up seeing Jimmy Choos piling up in TJ Max for the low low