Nothing goes together quite like shoes and purses — just look in my closet. For that reason, it makes sense that two high-end accessory brands would be interested in becoming one: Despite closing stores and falling sales Michael Kors went shopping this week, placing Jimmy Choo in its shopping bag.
Michael Kors announced today that it will pay $1.3 billion in cash to acquire luxury footwear and accessory brand Jimmy Choo.
With the deal, which has been approved by both companies’ boards, Michael Kors expects to grow its portfolio and expand its offerings to better compete in the accessory retail division.
The company, which said it would close 100 to 120 stores earlier this year, has struggled with sales in recent years. Just two months ago, the retailer’s comparable store sales fell by 14.1%, while sales over the fiscal year decreased 8.3%.
“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,” John D. Idol, Chairman and CEO of Michael Kors, said in a statement.
However, it’s unclear if scooping up the luxury brand will bring in more customers willing to shell out hundreds or thousands of dollars for shoes.
The acquisition is just the latest attempt by Michael Kors to polish its brand and increase sales.
Last year, the company pulled back on its department store presence and stopped accepting coupons.
According to the company, deep discounts at such stores led customers to think that the brand is worth less than it was, which in turn led to dips in revenue and profit margins for both department store and standalone store sales.
In the end, the company said it would offer fewer products at department stores and exclude those items from department stores’ “friends and family sales” and coupons.