Michael Kors’ £896 Mn Acquisition of Jimmy Choo
The rise of luxury conglomerates.
Deal Overview
Acquirer: Michael Kors Limited
Target: Jimmy Choo PLC
Total Transaction Size: $1.35 billion
Closed Date: November 1, 2017
On 25 July 2017, Michael Kors announced its acquisition of Jimmy Choo for $1.35 billion – roughly $1.2 billion for 100% of Jimmy Choo’s equity, plus net debt. The company was priced at approximately $2.99 per share, a 36.5% premium over its pre-announcement price of $2.21. Shares in Jimmy Choo surged by 10% to a record high of $2.42 upon the news, valuing the company at more than $936 million. The acquisition was financed through a combination of a new term loan facility, senior unsecured notes at an average interest rate of 3.1%, and available cash reserves. Executed via a UK scheme of arrangement, the deal ensured a smooth integration of Jimmy Choo into Michael Kors' brand portfolio.
Strategically, the acquisition strengthened Michael Kors’ presence in the luxury market by adding a renowned footwear brand, while enhancing its competitiveness globally, particularly in high-growth markets like Asia. It also allowed Jimmy Choo to retain its brand identity and leadership, enabling both companies to better compete with industry giants like LVMH and Kering, tapping into the growing demand for high-end fashion. Despite initial investor concerns, the deal ultimately set the stage for Michael Kors' rebranding as Capri Holdings in 2019, marking a key step in its expansion and diversification strategy.
As the fashion industry continues to evolve, with major deals like Prada's recent acquisition of Versace reshaping the competitive landscape, this report examines Michael Kors' strategic acquisition of Jimmy Choo in 2017. It delves into the key financial details, deal structure, and rationale behind the transaction, shedding light on how Michael Kors, now part of Capri Holdings Limited, is positioning itself within an increasingly competitive and ever-changing market. The report highlights the significance of brand synergy and long-term growth, exploring how this acquisition fits into the broader strategy of the group. In an era of consolidation, it highlights the shifting dynamics within the luxury fashion sector, offering valuable insights into the corporate transactions that are shaping the future of the industry.
Acquirer Overview: Michael Kors Holdings Limited (Now Capri Holdings Limited)
Founded in 1981 by designer Michael Kors, the brand started as a New York-based fashion label, initially focusing on luxury accessories and ready-to-wear fashion. Over the past 40 years, the brand has become synonymous with its accessible take on jet-set glamour, combining elegance with modern sophistication. Since then, Michael Kors has expanded its product portfolio to include handbags, footwear, watches, jewellery, and fragrances, with signature items like the iconic "Hamilton" handbag helping to define its distinct aesthetic.
Founded: 1981
LTM Revenue: $4.45 billion
CEO: John D Idol
LTM EBITDA: $1.07 billion
Market Cap: $5.65 billion
LTM EV/Revenue: 1.24x
EV: $5.53 Billion
LTM EV/EBITDA: 5.18x
History & Background
1981: Michael Kors founded as a global luxury brand, expanding beyond North America into key international markets.
2011: Michael Kors goes public with its IPO on the New York Stock Exchange under the ticker symbol KORS, raising $944 million at $20 per share (CNN Money, 2011). This marks a significant milestone in its growth, establishing the brand as a leader in accessible luxury fashion.
2017: Michael Kors acquires Jimmy Choo for $1.35 billion, strengthening its position in the luxury footwear market.
Target Overview: Jimmy Choo PLC (Now part of Capri Holdings Limited)
Founded in 1996 by British designer Jimmy Choo and his co-founder, Vogue photographer Tamara Mellon, Jimmy Choo quickly made a name for itself with its glamorous, luxury footwear designs. Known for its iconic stiletto heels, the brand became synonymous with high fashion and celebrity endorsement, attracting figures like Kate Middleton and Princess Diana. Over the years, the brand expanded its range to include bags, accessories, and men's footwear, while retaining its signature style of sophistication and elegance. Acquired by Michael Kors in 2017, Jimmy Choo has successfully balanced its heritage of exclusivity with wider appeal. With creative director Sandra Choi, who has been with the brand since its beginning, continuing to shape its vision, Jimmy Choo remains a major player in luxury fashion, adapting to new trends while staying true to its roots.
Founded: 1996
Revenue: $495 million
CEO: Pierre Denis
EBITDA: $83.2 million
Market Cap: $1.2 billion
EV/Revenue: 2.72x
EV: $1.35 billion
EV/EBITDA: 16.8x
History & Background
1996: British designer Jimmy Choo and Vogue photographer Tamara Mellon co-found the brand, initially focusing on high-end, bespoke women's footwear.
2014: Becomes the first luxury shoe brand to go public through an initial public offering (IPO), listing on the London Stock Exchange with shares priced at $2.25 per share, valuing the company at $874 million (Fashionista, 2014).
2017: Michael Kors acquires Jimmy Choo for $1.35 billion, strategically enhancing its presence in the luxury footwear market.
Motivation
Michael Kors’ acquisition of Jimmy Choo in 2017 was a carefully considered move to strengthen its position in the highly competitive global luxury market (Capri Holdings, 2017). For Michael Kors, the deal offered an opportunity to diversify its product portfolio and gain access to the high-end footwear market, where it had limited exposure. Already a leader in luxury handbags, Michael Kors saw Jimmy Choo, with its renowned expertise in luxury footwear and accessories, as a natural fit.
Global Expansion and Market Access: The acquisition provided Michael Kors with immediate access to Jimmy Choo’s well-established international presence, including 150 retail stores and 560 multi-brand locations. This global footprint was particularly beneficial in high-growth markets like Asia, aligning with Michael Kors’ ambition to expand in regions such as China, where demand for luxury goods was rapidly increasing.
Preservation of Brand Identity: Michael Kors retained Jimmy Choo’s leadership, including CEO Pierre Denis and Creative Director Sandra Choi, ensuring the preservation of the brand’s distinct identity. This helped maintain Jimmy Choo’s appeal among affluent consumers while benefiting from Michael Kors’ resources and expertise.
Operational Synergies: The integration of Jimmy Choo into Michael Kors’ operations created synergies across retail, supply chain, and global sales. These synergies were expected to lead to greater efficiency and long-term profitability for both brands.
Stability and Growth for Jimmy Choo: The acquisition provided Jimmy Choo with much-needed stability after a period of ownership changes and strategic challenges. With Michael Kors’ support, Jimmy Choo expanded its footprint, grew its sales to an estimated $1 billion, and positioned itself to compete alongside luxury industry leaders like LVMH and Kering.
The acquisition allowed Michael Kors to reduce its reliance on handbags and expand into the men’s luxury footwear market, an area where Jimmy Choo had already found success. This diversification strategy not only complemented its existing strengths but also positioned Michael Kors for long-term stability by mitigating risks associated with over-reliance on a single product category.
Deal Navigation
The acquisition of Jimmy Choo by Michael Kors in 2017 marked a significant strategic effort to diversify Kors’ portfolio and enhance its presence in the luxury footwear segment. While the transaction aligned with Kors’ ambition to transition from an accessible luxury brand to a global fashion house, it raised notable concerns around valuation, deal financing, brand performance and integration risk.
Valuation
Michael Kors offered approximately £896 million for 100% of Jimmy Choo’s equity ($1.2 billion dollars), representing a 36.5 percent premium over the brand’s share price at the time (CNBC, 2017). This premium raised considerable scrutiny. While such a figure suggested confidence in Jimmy Choo’s growth potential and global appeal, doubts emerged due to the brand’s inconsistent financial performance. Jimmy Choo had struggled particularly in the Asia-Pacific region and failed to meet sales expectations in recent years.
The high premium appeared less justifiable when compared to other acquisitions in the luxury fashion space. For instance, LVMH’s 2020 acquisition of Tiffany & Co. involved a brand with stronger growth momentum and broader consumer reach. Jimmy Choo, in contrast, had experienced stagnating revenues and limited expansion success. Although the brand retained high name recognition, questions remained over whether it could recover sufficiently to justify such a valuation.
Deal Structure and Financing
Michael Kors acquired 100 percent of Jimmy Choo’s shares, giving it full ownership. The deal was financed through a combination of cash and newly raised debt. Specifically, in November 2017, Michael Kors drew $1.0 billion under its Term Loan Facility, divided into a $600 million tranche with a three-year term and a $400 million tranche with a five-year term. In addition, the company issued $450 million of senior unsecured notes at 4.000 percent due in 2024.
This financing approach increased the company’s leverage and raised concerns among analysts and investors. The acquisition placed substantial financial pressure on Michael Kors, which now had to manage elevated debt levels while attempting to revitalise a brand with uneven performance. The burden of servicing this debt added urgency to the need for the acquisition to deliver returns relatively quickly.
Due Diligence
Due diligence was critical in identifying the risks and informing integration strategy. Financial due diligence revealed that Jimmy Choo had delivered flat sales growth, with declining performance particularly in key markets such as China and Japan. This called into question whether the brand could realistically meet Michael Kors’ ambitious growth expectations.
Operational due diligence focused on the efficiency and scalability of Jimmy Choo’s supply chain and distribution networks. These were essential to maintaining brand exclusivity while ensuring global availability. Additionally, Kors had to assess whether Jimmy Choo's production and retail footprint could be integrated without diluting brand identity.
Legal and tax due diligence examined the implications of operating in multiple jurisdictions. Given Jimmy Choo’s presence in over 30 countries, understanding the tax obligations and regulatory environments across various regions was essential to avoid post-acquisition liabilities and ensure compliance.
Regulatory Approvals
The deal required regulatory clearance in several key jurisdictions, notably in the European Union and the United States. Despite concerns about potential antitrust implications in the competitive luxury sector, the acquisition passed regulatory scrutiny without major obstacles. However, the process of securing multi region approval introduced the risk of procedural delays, which could have disrupted transaction timelines.
Ultimately, the deal was approved smoothly, signalling that regulators did not view the combination as a threat to market competition.
Closing
The acquisition closed in the second half of 2017 without major issues, but the market reaction was mixed. Many analysts were cautious, noting the high acquisition premium and the lacklustre recent performance of Jimmy Choo.
The primary challenge post-closing was the integration of Jimmy Choo into Michael Kors Holdings (which later rebranded as Capri Holdings). This required careful balancing: Kors needed to leverage operational synergies, such as shared sourcing and retail platforms, while preserving the premium brand identity and distinct creative direction of Jimmy Choo.
Success depended heavily on Michael Kors’ ability to revitalise the Jimmy Choo brand, expand its global footprint, and improve performance without undermining its luxury positioning. The acquisition was also seen as a test case for Kors’ broader strategy of building a multi brand luxury group.
Integration
Following the acquisition, Michael Kors preserved Jimmy Choo’s luxury identity by retaining key leadership and allowing the brand autonomy, balancing heritage with support. However, integrating corporate cultures and achieving synergies proved difficult. Underperformance in key markets such as Asia cast doubt on growth expectations, while the significant debt from the deal increased financial pressure. Despite these challenges, Michael Kors remains committed to leveraging Jimmy Choo’s position in luxury footwear as part of a wider diversification strategy, aiming for long-term growth amid ongoing market and operational difficulties.
Financial Performance
Following Michael Kors' acquisition of Jimmy Choo in 2017, Capri Holdings experienced improvements in both EBITDA and net income margins in 2018.
EBITDA margin rose to 20.4% from 24.7% in 2017, and net income margin increased to 12.55% from 12.3%, driven by synergies from Jimmy Choo's high-margin business.
However, the COVID-19 pandemic in 2020 caused a significant decline in both margins, with the EBITDA margin dropping to 1.17% and net income margin falling to -4.02%.
ROIC increased from 24.7% in 2017 to 20.4% in 2018, reflecting value creation and returns exceeding the cost of capital, but it sharply fell to 1.17% in 2020 due to pandemic disruptions.
ROE rose from 12.3% in 2017 to 12.55% in 2018, showing efficient equity utilisation, but dropped to -4.02% in 2020.
ROA remained stable at 8.93% in 2018 and 2019, indicating efficient asset utilisation, but dropped to 1.17% in 2020 due to pandemic-related challenges.
In conclusion, while the acquisition of Jimmy Choo initially led to operational efficiencies and positive financial outcomes, the pandemic in 2020 severely impacted these metrics, diminishing the overall positive impact of the deal.
Strategic Moves
Michael Kors’ acquisition of Jimmy Choo in 2017 aimed to enhance its position in the luxury market, particularly in the high-end footwear segment. The move allowed Michael Kors to broaden its portfolio and gain access to key growth markets, including Asia. The acquisition also provided immediate access to Jimmy Choo’s global retail network, with over 150 stores and a presence in more than 500 multi-brand locations. By retaining Jimmy Choo’s leadership team, the brand’s luxury identity was preserved while benefiting from Michael Kors’ operational support. In the post-acquisition period, Jimmy Choo focused on strengthening its digital presence, expanding its product range, and pursuing strategic partnerships. With ambitious revenue targets of £600 million by FY25 and £800 million by FY28, the brand is poised for continued growth and global recognition.
Outcome
Industry Impact
After its acquisition of Jimmy Choo in 2017 and subsequent rebranding to Capri Holdings in 2019, Michael Kors significantly reshaped its market presence. This strategic move allowed Capri to evolve from a leader in accessible luxury (via Michael Kors) into a more diversified luxury fashion group, incorporating Jimmy Choo and Versace (Capri Holdings, 2018). While Capri Holdings has carved out a notable position in the global luxury market, it still lags behind industry giants such as LVMH and Kering. Though market share figures fluctuate, Capri’s luxury division (comprising Jimmy Choo and Versace) accounted for approximately 27.9% of the company’s total revenue in Q3 of Fiscal 2025, signalling its growing appeal to a wealthier consumer base. This expansion has also strengthened Capri’s footprint in key growth markets, including Asia and the Middle East. Despite trailing larger conglomerates, Capri has effectively positioned itself as a competitive force in both the accessible and high-end segments of the luxury fashion industry.
Value Creation
Following Michael Kors' acquisition of Jimmy Choo in November 2017, the financial results raised key questions about the effectiveness of the deal. While the acquisition did contribute to the company’s earnings, the impact was more modest than initially expected.
Q2 2019 Adjusted EPS: Michael Kors reported $1.27, with a modest contribution of $0.04 to $0.06 from Jimmy Choo, which, while positive, was minor relative to overall performance.
Full-Year EPS Guidance: Raised to $4.95–$5.05, a slight increase from the previous $4.90–$5.00, indicating modest accretion from the acquisition but below the substantial impact expected given the high acquisition premium.
Jimmy Choo's Pre-Acquisition EPS: In 2016, Jimmy Choo reported basic EPS of 4.1 highlighting the limited immediate impact on Michael Kors' earnings post-deal.
The underperformance of Jimmy Choo in key markets, particularly Asia, and its modest revenue contribution - $159 million in Q3 Fiscal 2025 (Capri Holdings, 2025b) compared to Capri Holdings' total of $1.26 billion, suggest that the acquisition may not have delivered the expected accretive benefits. Combined with the structure of the deal, this may have significantly expanded Capri’s financial obligations. More recently, a new $700 million term loan was secured to refinance these liabilities, meaning that over half of quarterly revenue now aligns with recent debt activity. Hence, although the acquisition supported some EPS growth and broadened Capri’s luxury portfolio, the high premium paid, limited earnings impact, and persistent challenges in core markets indicate that the deal may have fallen short of creating near-term shareholder value.
Great Success or Resounding Failure?
Michael Kors’ acquisition of Jimmy Choo could be interpreted as a strategic attempt to diversify its luxury portfolio and strengthen its presence in the high-end footwear market. The deal complemented Michael Kors’ existing strengths in handbags and ready-to-wear fashion, aligning with Capri Holdings’ broader ambitions to evolve into a global luxury conglomerate. However, the integration of Jimmy Choo has faced notable challenges. Despite retaining key leadership and aiming for operational synergies, the brand underperformed in critical markets, particularly across Asia, where luxury demand is rapidly growing. These difficulties, coupled with less-than-expected synergy realization, have raised questions about the acquisition’s ability to generate sustainable long-term value.
In 2025, Capri Holdings’ decision to sell Versace (Capri Holdings, 2025a) marked a strategic shift, signalling a renewed focus on core brand strength and portfolio simplification amid an increasingly competitive and volatile luxury landscape. This move underscores the pressures facing the group as it navigates evolving consumer preferences and market dynamics.
As Capri concentrates on reinforcing Michael Kors’ position in accessible luxury, the future role of Jimmy Choo within the group remains uncertain. While the acquisition initially promised growth and diversification, it now faces scrutiny over its contribution to Capri’s long-term success, highlighting the challenges luxury conglomerates face in balancing brand heritage with market demands.
House View
Value Created, Challenges Remain
The deal marked a pivotal step in building a multi brand luxury portfolio, enabling Capri to diversify its category exposure and expand into high potential geographies. Through Jimmy Choo, Capri gained immediate entry into the luxury footwear space and reinforced its presence in key growth markets, notably Asia and the Middle East (Backlite Media, 2025). The decision to preserve brand autonomy and leadership allowed Jimmy Choo to maintain its aspirational appeal, while operational alignment across areas such as retail and sourcing delivered incremental efficiencies.
Nevertheless, the transaction has been accompanied by notable headwinds. The high premium paid placed considerable pressure on the brand to deliver sustained outperformance, something that has proved elusive amid uneven regional sales and intensified market competition (Reuters, 2025). Integration challenges also surfaced, with differences in brand identity and corporate culture limiting the depth of synergy realisation. Despite Jimmy Choo’s continued growth focus and long-term revenue targets (Capri Holdings, 2025c), the acquisition’s short term financial impact has fallen short of initial expectations.
The story of Michael Kors’ acquisition of Jimmy Choo is one of a strategic move aimed at diversification and market expansion, yet it highlights the complexities involved in integrating luxury brands with differing market positions and operational models. While Capri Holdings did derive benefits from the acquisition in certain areas (most notably within the luxury footwear sector and emerging markets) the financial strain, brand challenges, and integration difficulties demonstrate that acquisitions in the luxury market come with significant risks.
The key lesson from this deal lies in the need to balance the strategic fit of a target company with a pragmatic approach to valuation, cultural integration, and operational synergies, all while ensuring the preservation of the acquired brand’s unique identity.
References:
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Financials were sourced from LSEG Workplace and Investing.com.