Purse-seller bags shoe-firm deal

$1.2 bil­lion Jimmy Choo buy widens Michael Kors’ foot­print.

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - ROBERT WILLIAMS AND THOMAS MULIER

Michael Kors Hold­ings Ltd. agreed to buy Jimmy Choo PLC for about $1.2 bil­lion, as the maker of hand­bags pop­u­lar with the com­muter set seeks to re­store lost lus­ter 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 a pres­ence in higher-end lux­ury to the New York fashion and ac­ces­sories com­pany, in a move sim­i­lar to Coach Inc.’s 2015 ac­qui­si­tion of shoe­maker Stuart Weitz­man.

Lon­don- based Jimmy Choo rose to promi­nence in the late 1990s with high­pro­file 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 U.S. lux­ury in­dus­try, with Coach also agree­ing to buy Kate Spade & Co. this year.

“Again, Michael Kors fol­lows the path of Coach — and again, on steroids,” wrote 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.”

Michael Kors has been clos­ing stores and re­duc­ing its ex­po­sure to de­part­ment stores in an ef­fort to en­hance 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 $298 tote bags are cur­rently sold for as low as $149.

Chief Ex­ec­u­tive Of­fi­cer John Idol said the com­pany still plans to make more ac­qui­si­tions of lux­ury brands and would con­sider pur­chases or merg­ers in the lux­ury footwear and ac­ces­sories cat­e­gories — es­pe­cially those like Jimmy Choo that are backed by a founder “who has a true vi­sion for what their brand is.”

Idol said the goal is to cre­ate an “in­ter­na­tional lux­ury com­pany” and added that Michael Kors would be less in­ter­ested in brands that are “a lit­tle bit more broadly dis­trib­uted” that rely on whole­sale, he said on a conference call.

Jimmy Choo com­petes with the likes of Manolo Blah­nik and Chris­tian Louboutin for the at­ten­tion of fans of high-heeled women’s shoes, sell­ing models like the $800 Lance. The brand gets

its name from its Malaysian­born co-founder, who cre­ated it in 1996 with Bri­tish de­signer Ta­mara Mel­lon and opened its first store in Lon­don a year later.

JAB Hold­ing Co., owned by the bil­lion­aire Reimann fam­ily, has com­mit­ted to sell its 68 per­cent stake. The in­vest­ment com­pany bought Jimmy Choo for more than $652 mil­lion in 2011 and later pared its hold­ings in a 2014 ini­tial public of­fer­ing. Be­fore that, Jimmy Choo has been bought and sold by pri­va­tee­quity in­vestors three times.

In April, JAB said it was re­view­ing op­tions for the shoe brand and leather-goods maker Bally In­ter­na­tional AG to step away from fashion and footwear. The com­pany plans to fo­cus on its food and bev­er­age busi­nesses, which has grown into one of the world’s largest cof­fee sell­ers through ac­qui­si­tions of brands such as Cari­bou Cof­fee Co., Krispy

Kreme Dough­nuts and Pan­era Bread.

Michael Kors will pay $3 a share for the lux­ury shoe­maker, a pre­mium of 18 per­cent over Mon­day’s close, the com­pa­nies said Tues­day.

Michael Kors stock has lost about two-thirds of its value since peak­ing in Fe­bru­ary 2014. The stock had more than dou­bled in the two years prior. Jimmy Choo shares rose as much as 17 per­cent in Lon­don on Tues­day, com­ing within 1 penny of the bid price. Shares of Michael Kors rose 2 cents to close Tues­day at $34.93.

“Jimmy Choo is a high­erend brand that gives Kors a bit more di­ver­sity,” said John Guy, lux­ury an­a­lyst and man­ag­ing di­rec­tor at MainFirst Bank AG.

The deal could be sus­cep­ti­ble to a coun­terof­fer, Guy said, as some mi­nor­ity share­hold­ers are likely to hold out for a bet­ter price.

Bloomberg News/MISHA FRIED­MAN

Cus­tomers exit a Michael Kors store un­der con­struc­tion in New York on June 11. The hand­bag­maker has agreed to buy Jimmy Choo PLC for about $1.2 bil­lion.

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