Michael Kors is buying high-end shoe designer Jimmy Choo for $1.2 billion in cash.
“We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury house,” Michael Kors CEO John Idol said in a statement. “Jimmy Choo is known worldwide for its glamorous and fashion-forward footwear. The company is a leader in setting fashion trends. Its innovative designs and exceptional craftsmanship resonate with trendsetters globally. 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.”
Jimmy Choo shares rose more than 17% in London as soon as the news broke.
This move will certainly help Michael Kors, whose middle-market clientele has been wavering in support, get a much needed boost in sales. Michael Kors is one of many companies that relies on department stores and outlet malls for the bulk of its sales while battling it out with the “fast-fashion” brands (such as H&M, Forever 21, and Uniqlo) and losing every time. However, luxury brands like Jimmy Choo aren’t feeling the effects from the tightening of purse strings. High-end fashion is still doing well among its clientele.
This consolidation will help Michael Kors expand its product lines as well as improve sales globally, especially in Asia.
Jimmy Choo is well known amongst “Sex and the City” fans, where the fashion company first became a national name. Since then, Jimmy Choo has kept its momentum with a surge in customer base and sales. A pair of pumps from the retailer could cost upwards of $1,000. On the flip side, you can get a Michael Kors bag for $70-100.
The new deal is expected to expand Michael Kors’ consumer base and increase international sales.