Unless you’ve had your head in a leather bucket bag all day, you’ve probably heard about the Michael Kors/Jimmy Choo acquisition. Here’s what you need to know about it: Indeed, Michael Kors confirmed today that it will acquire luxury British footwear brand Jimmy Choo for $1.2B, or £896 million. The move comes on the (stiletto) heels of Coach’s acquisition of handbag maker Kate Spade. Like Coach, Kors hopes the merger will combat previously sagging sales, which dove 11% in the latest quarter, according to Forbes.
Michael Kors is among the many brands and retailers who have faced turmoil in recent years, battling the ever-competitive Amazon as well as off-price stores and fast-fashion names like TJ Maxx and Zara. In May, the brand announced it would shutter up to 125 stores due to sagging sales. Enlisting the brand power of a coveted name such a Choo provides endless opportunity to bolster both brands.
The deal has yet to excite investors, however, as shares were only up slightly more than 1% in today’s premarket trade, according to Investor Place. In a LA Times article, analysts from Jeffries said the deal could help Michael Kors rebuild its brand name, however the boost would happen in the long term, not with an immediate effect in the company’s stock.
According to a Michael Kors release, the move offers the opportunity to grow Jimmy Choo sales to $1 billion with an enhanced positioning in the growing luxury footwear segment. The brands also hope to bolster exposure to global markets, particularly the fast-growing market in Asia.