Michael Kors steps out with Jimmy Choo in $1.6b buyout deal

Jimmy Choo shoes and clutch in a fashion shoot. London-based Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile devotees. One of its luxury stores in Sloane Street (below). The designer behind label Michael Kors.
Jimmy Choo shoes and clutch in a fashion shoot. London-based Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile devotees. PHOTOS: ST FILE, BLOOMBERG
Jimmy Choo shoes and clutch in a fashion shoot. London-based Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile devotees. One of its luxury stores in Sloane Street (below). The designer behind label Michael Kors.
One of its luxury stores in Sloane Street (above).PHOTOS: ST FILE, BLOOMBERG
Jimmy Choo shoes and clutch in a fashion shoot. London-based Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile devotees. One of its luxury stores in Sloane Street (below). The designer behind label Michael Kors.
The designer behind label Michael Kors.PHOTO: COURTESY OF MICHAEL KORS

NEW YORK • Michael Kors Holdings agreed to buy Jimmy Choo for about £896 million (S$1.59 billion), as the maker of handbags, popular with the commuter set, seeks to restore lost lustre by adding Sex And The City stilettos.

The purchase of Jimmy Choo, Michael Kors' first deal to expand beyond its own brand name since its initial public offering in 2011, gives the New York fashion and accessories company a presence in higher-end luxury, in a move similar to Coach's 2015 acquisition of shoemaker Stuart Weitzman. 

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

The deal comes amid consolidation in the United States luxury industry, with Coach also agreeing to buy Kate Spade earlier this year.

"Again, Michael Kors follows the path of Coach," wrote Mr Luca Solca, an analyst at Exane BNP Paribas. "After a meteoric rise and spectacular crash, it is now the time to recycle cash into other brands."

The company has been closing stores and reducing its exposure to department stores in an effort to boost its exclusivity. Alongside Ralph Lauren and Calvin Klein, Michael Kors has struggled to maintain its brand image after broadly distributing its products in discount stores and outlet malls. On the Macy's website, for example, the brand's signature US$298 (S$405) tote bags are sold for as low as US$149.

Jimmy Choo, named after its Malaysian-born co-founder, was created in 1996 and opened its first store in London a year later.

JAB Holding, owned by the billionaire Reimann family, has committed to sell its 68 per cent stake. The investment company bought Jimmy Choo for more than £500 million in 2011 and later pared its holdings in a 2014 initial public offering.

In April, JAB said it was reviewing options for the shoe brand and leather-goods maker Bally International to step away from fashion and footwear.

Michael Kors will pay 230p a share for the luxury shoemaker, a premium of 18 per cent over Monday's close, the firms said yesterday. The price is equal to about 13 times Jimmy Choo's adjusted earnings before interest, tax, depreciation and amortisation for this year, said Bloomberg Intelligence analyst Deborah Aitken. Jimmy Choo shares rose 17 per cent in early trading yesterday, almost reaching the bid price.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 26, 2017, with the headline 'Michael Kors steps out with Jimmy Choo in $1.6b buyout deal'. Print Edition | Subscribe