Jimmy Choo Buy Out & What It Means For Us

Hello Lovelies,

I hope you are keeping well.

Jimmy Choo, one of many shoe brands that are on every girl’s shoe list. The elusive ‘Jimmy Choo Shoe’ it was going to be the first pair of designer shoes I was going to buy.On Tuesday Night, Michael Kors acquired Jimmy Choo in a £1.2 million deal. Now, if I buy something from Michael Kors does that automatically mean I’ve bought Jimmy Choo?

In the immortal words of Rachel Green:

No, unfortunately, Michael Kors will always be bags & purses. Jimmy Choo will always be shoes.

Michael Kors, pictured above with his signature aviators will pay 230 pence a share for the luxury shoemaker, a premium of 18 percent over Monday’s close. The price is equal to about 17.5 times Jimmy Choo’s adjusted Ebitda for 2016. The boards of both companies have approved the deal, they said in a statement Tuesday.

The Jimmy Choo(pictured above) brand rose to notoriety in the late 1990s, boosted by high-profile devotees including the late Princess Diana and the fictional Carrie Bradshaw in television series “Sex and the City.”

Jimmy Choo was acquired by private-equity investors three times before being bought by JAB Holding Co. for more than £500 million in 2011. JAB, the investment vehicle of the billionaire Reimann family, sold a stake in a 2014 initial public offering, though has remained the company’s majority owner with a 68 percent stake.

Bank of America Merrill Lynch and Citigroup advised Jimmy Choo. Goldman Sachs and JPMorgan Chase & Co. advised Michael Kors.

Michael Kors said it would keep Jimmy Choo’s existing management team, led by chief executive officer Pierre Denis.

While many think that Kors and Choo may seem like a strange match with Jimmy Choo sells its Molly crushed velvet high heel sandals for $875, and, Michael Kors sells its Annaliese leather platform sandals for $140. So why the marriage and what does it mean for the future of the two brands?

Michael Kors has already set targets to more than double sales to $1 billion from $470 million, with 10 new retail store openings a year globally, a strengthened online presence and an expanded men’s luxury footwear range. Given the strength of Michael Kors’ handbag business, customers can expect more emphasis on bags too.

“Clearly we have a great expertise in that world and we think we can add value in thoughts and ideas and brainstorming with the team to make [handbags] a more important part of the business,”

“Acquiring Jimmy Choo is the beginning of a strategy that we have for building a luxury group that really is focused on international fashion brands,” 

Though both Michael Kors and Jimmy Choo are red-carpet favorites, they appeal to different segments of the population. Michael Kors, known for fashion-forward designs and competitive prices, is heavily reliant on outlets and department stores, where deep discounting is common. Jimmy Choo occupies a higher price point: Open-toe slip-on sandals sell for $425, while crystal-encrusted shoes with the brand’s signature sky-high stilettos go for nearly $3,000. The brand brings not only a different range of customers, but also hefty profit margins and an upmarket aura. 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.

I’m sure this buy out won’t be the last.

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