With the most recent M&A Activity, we have a partnership between Michael Kors (MIK) and Jimmy Choo. Both companies, who have had their fair share of respectable growth and dominance in the luxury retail / apparel space, have agreed to a deal where Michael Kors is purchasing Jimmy Choo for roughly $1.2 billion.
Michael Kors, who has not been exempt from the trials of a struggling retail sector, announced in May of this year that it plans to close 100 to 125 stores over the next two years. Jimmy Choo, in addition, has been facing sluggish sales numbers and as a result put up itself for sale. Two sub-par companies with existing brands merge together in hopes to swing things positive for the remainder of the year. But the question is, will it work?
Michael Kors said the deal would give it a greater position in the market for luxury footwear and accessories. Additionally it will provide opportunities to expand in Asia and diversify its product line into men’s wear. Kors said it hopes to more than double Jimmy Choo’s annual sales to $1 billion.
In a company statement, Kors CEO John Idol “The company is a leader in setting fashion trends. Its innovative designs and exceptional craftsmanship resonate with trendsetters globally… We believe that Jimmy Choo is poised for meaningful growth in the future and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years.”
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