Fashion giant, Michael Kors, sent the fashion world in an uproar upon news he has just bought high end shoe company Jimmy Choo.
This news comes after years of claims that Michael Kors sales have slowly been on the decline causing them to close around 125 stores worldwide. Some attribute this to the major decrease in mall shopping. So the question is whether or not this could mean a turnaround for the retail giant. After all Jimmy Choo seemingly has a difference in demographic. On any given mall trip you can find a Michael Kors bag for as little as $70, where as Jimmy Choo shoes range from $400 to around $3,000.
The amount spent has also come under fire, as the price of $1.2 billion hardly seems worth it to many in the fashion industry, however, according to John D. Idol, the CEO of Michael Kors, they can double their annual sales to $1 billion. This comes on the heels of accessories brand Coach and their acquiring of Kate Spade for $2.4 billion, which happened earlier this year.
Could these buy outs be the start of a trend where fledgling companies acquire others as attempts to expand their own brands? In the grand scheme of things, you could look at it as colleagues coming together as a way of helping each other out. Others like Chris Hughes and Shelly Banjo, columnists for Bloomberg, believe this merger could be dangerous for Kors, as it “devalues the legacy it has acquired.” Having sold many items to department stores, Kors’ label has already seen his brand diminish as most bags are heavily discounted. An association to a luxury retailer like Jimmy Choo could possibly be what the brand needs in order to be seen as high end once again. Only time will show the true benefits.
Written By: Dominique Bedell