US-based clothing and accessories retailer Michael Kors has agreed to acquire luxury fashion brand Jimmy Choo for around £896 million. The all-cash deal values the company at 230p per share and bags Michael Kors a business with around 210 company-operated and franchise locations across the world. Should the transaction go through, plans are afoot to boost Jimmy Choo’s sales to $1 billion, grow its men’s footwear offering and pivot toward the fast-growing Asian market.
Corporate M&A in the clothing and trinkets has hit a high point in recent years, with the 241 and 231 completed deals worldwide in 2016 and 2015, respectively, according to the PitchBook Platform, the highest totals on record.
However, while the Jimmy Choo takeover indicates clothing brands on the continent are hot right now, a closer look at the numbers shows that European acquisitions in the industry are going out of fashion. Just 27 deals have been sealed in Europe so far this year, per PitchBook data, compared with 34 in the US, while its percentage of the overall deal count has slipped to 36%. If this carries on, 2017 will be the first year since 2007 when Europe hasn’t had more apparel & accessories deals than the US.
Completed M&A deals in apparel and accessories
Luxury retail brands are facing increasing competition and pressure, which could explain why some might find splashing the cash on large names with big prices unappealing. Online luxury retail startup Farfetch, for instance, recently bagged a $397 million investment from China's JD.com and is reportedly planning an IPO.
Meanwhile, established brands appear to be struggling, and are not getting support from investors. Jimmy Choo, for instance, was put up for sale in April after backer JAB switched focus to food & beverages, while companies in the US are also finding it tough as private capital turns away.
Read more of our coverage of the retail space.
Article by Sean Lightbown, PitchBook