Popular luxury shoe brand, Jimmy Choo, is going on the sales block. JAB Holding acquired the fashion brand in 2011 (for 540 million pounds—approximately $800 million, USD) and now owns a 67.6 percent stake. As the controlling shareholder, then, JAB Holding has said it is quite possible that they will sell off of their luxury brands, probably in favor of pursuing coffee.
Indeed, the investment firm has been scooping up American coffee brands left and right since 2012. They now own Peet’s Coffee & Tea, Keurig Green Mountain, and Caribou Coffee. JAB also has stakes in high-end coffee businesses like Stumptown Coffee Roasters and Intelligentisa Coffee & Tea.
This actually makes a lot of sense, if you really think about it. Luxury brands are not performing as well in the United States, as they had been in the past, but coffee (and coffee culture) continues to flourish. After all, coffee is the most widely consumed beverage in the world.
As such, Moody’s senior analyst Jeanine Arnold comments, “We consider disposals of JAB’s luxury business make sense as they do not offer the same cost synergy advantages as the company’s other businesses in the fast-moving consumer goods sector.”
Now, the Jimmy Choo brand could certainly attract interest from many other luxury companies in the US, Europe, and Asia. Private equity firms could also bite at the chance. There is already speculation, for example, that JAB could entertain interests from the liks of Kering and Coach Inc and Michael Kors Holdings as well as the billionair brothers Victor and William Fung.
“What remains to be seen is whether growing interest from Asia and the Middle East for luxury U.K. brands will see Jimmy Choo receiving offers from foreign buyers searching for well-known British brands,” explains Jonathan Buxton, who is a partner with and the head of consumer at Cavendish Corporate Finance.
Indeed, the JAB announcement does not mention any specific bids have been made. Still, footwear is a bit of a hot industry right now, so the right company could make a fortune by adding this designer to their brand. As yet, too, JAB has not listed the exact sale process, intimating instead that it should probably be completed by the end of this summer.
And, as is often the case in these matters, shares of Jimmy Choo shot up 9 percent on the heels of the announcement.