US fashion retailer replica Michael Kors Holdings Ltd (NYSE:KORS) has snapped up UK luxury shoemaker Jimmy Choo for US$1.2bn.
Jimmy Choo, made famous by celebrity fans including Princess Diana and singer Beyonce, put itself up for sale in April after majority owner JAB signalled its intention to focus on consumer goods.
Michael Kors outlet, best known for its affordable luxury handbags, has been expanding into dresses and menswear in an effort to address declining same-store sales in recent quarters.
Likewise, Jimmy Choo has seen sales slow in recent years.
Jimmy Choo will become a wholly-owned subsidiary of Michael Kors but will continue to operate as it does today under its existing management team.
“Jimmy Choo is an iconic premier luxury brand that offers distinctive footwear, replica handbags and other accessories,” said Michael Kors, honorary chairman and chief creative officer.
“We admire the glamorous style and trend-setting nature of Jimmy Choo designs.”
Jimmy Choo was co-founded in east London by Malaysian shoemaker Jimmy Choo and former Vogue journalist Tamara Mellon in 1996.
Shares in replica Michael Kors fell 1.37% to US$34.43 in US pre-market trading.
Jonathan Buxton, partner and head of consumer and retail at Cavendish Corporate Finance, said: “This is a significant transaction for replica Michael Kors handbags as it seeks to boost its customer base within the luxury market.
“Jimmy Choo is a widely popular footwear brand but like so many upmarket brands, it has been facing declining sales due to discounting in department stores and customer preferences moving away from conspicuous labels.”
For replica Michael Kors, Buxton said, the deal presents an opportunity to enter the high-end of the luxury market, to increase sales and to diversify away from its own brand, especially at a time when it is experiencing declining same-store sales.
“The acquisition also signals Michael Kors’ push back against competitor Coach, which earlier this year purchased Kate Spade for $2.4 billion, and we expect more consolidation in this market, with more ‘affordable’ luxury houses looking to upscale.”