JAB takes steps to sell luxury brands
Company says it’s putting Jimmy Choo up for sale to focus on coffee chains
LONDON— The billionaire Reimann family’s investment vehicle is unwinding its luxury holdings, putting shoemakers Jimmy Choo and Bally International up for sale to focus on the food and beverage operations it has spent billions expanding in recent years.
The Vienna-based family’s JAB Holding Co. said Monday it’s reviewing strategic options for both companies at a time when it’s snapping up U.S. coffee chains and a China-led revival in demand has boosted luxury valuations.
“We consider disposals of JAB’s luxury business make sense as they do not offer the same cost synergy advantages as the company’s other businesses in the fast-moving consumer goods sector,” Jeanine Arnold, senior analyst at Moody’s, said in a note.
The announcements signal the end of a nearly decade-long involvement in high-end shoemaking for JAB that started when its Labelux unit bought Bally in 2008. More recently, the closely held company has fixed its focus on food and beverages, buying the likes of Caribou Coffee, Krispy Kreme Doughnuts and Panera Bread.
JAB said it has made a “strategic decision” to focus on consumer goods, including a 37-per-cent stake in cosmetics maker Coty Inc. The announcement made no mention of British jacket-maker Belstaff, which also forms part of JAB’s luxury-goods portfolio.
Shares in Jimmy Choo have leapt 11 per cent after its board put the luxury shoe brand up for sale.
The gains bring the market value of the firm that began in East London to over £700 million ($1.2 billion).
The brand, whose fans have ranged from the late Princess of Wales to the fictional Carrie Bradshaw of Sex and the City, was acquired by private-equity investors three times before being bought by JAB for more than £500 million in 2011. JAB sold a stake in a 2014 initial public offering, though with a 68-per-cent holding remains the company’s majority owner. The shoemaker is “under-represented in many markets,” Antoine Belge, an analyst at HSBC, said in an email.
“The issue is that the company underestimated the cost of retail expansion. Being part of a larger group could help in that regard.”
The company’s revenue rose 15 per cent last year to £364 million, boosted by the fall in the pound since the U.K.’s vote to leave the European Union, which increases the value of overseas sales when converted into the British currency.