Michael Kors buys Jimmy Choo for $1.2 billion

Michael Kors buys shoemaker Jimmy Choo

Killian noted that he anticipates that similar retailers will follow the lead of Michael Kors and Jimmy Choo in building formal or loose alliances, because they will have to scale to become unavoidable gateways to valuable consumers.

The shoemaker has the potential of raking in $1 billion in sales annually as it opens more stores in Asia, especially China, Kors Chief Executive John Idol said.

The Coach and Michael Kors deals help each brand diversify its customer base, according to retail analysts at Jane Hali & Associates. "KORS is working in reverse; they are known for the affordable line of Michael and now with the acquisition of Jimmy Choo they are building strength in the luxury market". Earlier this year, in a sign of growing consolidation among brands, Coach agreed to buy Kate Spade for $2.4 billion.

Jimmy Choo initially announced that it wanted a new buyer in April. The Kors brand helped further that trend by selling a good portion of its wares in department stores, which heavily discounted prices, making it hard to get customers to buy their products at full price.

His company recently "embarked on a turnaround program saying it would close 100 to 125 of its full-price retail stores and renovate existing stores".

Shares of Jimmy Choo, which trade on the London Stock Exchange under the ticker "CHOO", rallied after the news broke, surging over 17%.

Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile fans, including the late Princess Diana and the fictional Carrie Bradshaw in television series "Sex and the City".

JAB said there was "no certainty that a sale of all or any of [JAB's] shareholding in Jimmy Choo will take place, nor as to the terms on which any such transaction may take place".

Michael Kors executives touted the geographic diversity of Jimmy Choo stores.

The firm was co-founded by Malaysian shoemaker Jimmy Choo, who trained at the renowned Cordwainers Technical College in London, and former Vogue journalist Tamara Mellon in 1996.

Jimmy Choo produces a range of high-end goods including shoes, scarves, sunglasses and fragrance.



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