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Is Jimmy Choo worth $1.2 billion?

Jimmy Choo is loved by everyone from Beyoncé to the Duchess of Cambridge, but is the brand worth $1.2 billion? We reckon buyer Michael Kors might have bagged himself a bargain.

Jimmy Choo stilettos sell for $2,000-plus − but for celebrity fans like Emma Stone and Kendall Jenner they’re a steal. Michael Kors agrees. The US fashion designer has snapped up the luxury shoemaker for a cool $1.2 billion.

“We admire the glamorous style and trend-setting nature of Jimmy Choo designs,” said Kors.

Jimmy Choo: Cheap at the price?

Analysts are hedging their bets on whether or not the deal is a great piece of business.

Jimmy Choo was started in 1996 by the Malaysian-born designer in partnership with British Vogue editor Tamara Mellon. Choo’s colourful designs became a must-have accessory for the well-heeled Sex and the City generation including star Sarah Jessica Parker.

As a result, the brand grew to 150 stores worldwide and posted record revenues of £364 million in 2016. Choo sold his 50% stake in 2001. Mellon also left in 2011 when JAB Luxury bought the firm for more than £500 million.

jimmy choo - Compelo
© 2017 Jimmy Choo PLC

“Some other brands are very over exposed, like the red-soled Loubutin, but Jimmy Choo managed to get in the limelight, stay there but never become over saturated,” Lisa Armstrong, fashion director of the Daily Telegraph, told BBC News. “It’s still the shoe of choice for the Oscars,” she said.

Jimmy Choo also sells handbags, accessories and perfume, but 75% of its 2016 revenue came from shoes.

Retail revolution

Kors said he welcomed “the opportunity to grow Jimmy Choo sales to one billion dollars”. In addition, Kors intends to grow the brand in the men’s luxury footwear category and fast-growing markets such as Asia.

The world-famous brand could be just what Kors needs to revive the fortunes of his luxury goods empire.

Forbes reports that Michael Kors sales were down 11% in the latest quarter. As such, the company is closing 100 to 125 of its standalone stores. One of Michael Kors’ US rivals, Coach, recently bought trendy label Kate Spade for $2.4 billion in a similar deal.

jimmy choo - Compelo
© 2017 Jimmy Choo PLC

Online shopping and discount stores like TJMaxx and H&M continue to eat into the profits of traditional high street stores.

UK shoppers spent £1 billion a week online in March, 19.5% more than in the same month last year.

“The real sticking point for these brands is going to come at retail,” says Pamela Danzinger, author of ‘Putting the Luxe Back in Luxury’. “Kors has 827 stores, with reported plans to close 125 this year, and Jimmy Choo 150. This makes the combined companies incredibly vulnerable to the current disruption in the retail sector.”

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