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To Put Their Best Foot Forward, Luxury Fashion Brand Jimmy Choo Invites Buyers


04/24/2017


To Put Their Best Foot Forward, Luxury Fashion Brand Jimmy Choo Invites Buyers
As part of a strategic review launched by the luxury fashion and accessories retailer on Monday, Britain's Jimmy Choo has invited potential buyers to step forward.
 
"The Board of Jimmy Choo announces today that it has decided to conduct a review of the various strategic options open to the Company to maximise value for its shareholders and it is seeking offers for the Company," read the official announcement. The support of JAB Luxury, the company's majority equity investor with 70 percent of the shares, had confirmed, the announcement added.
 
To add to its U.S. food and coffee empire, U.S. bakery Panera Bread was agreed to be bought for $7.5 billion by JAB, the investment company controlled by the Germany's billionaire Reimann family, earlier this month.
 
Jimmy Choo said it had not yet received any offers as of Monday morning.
 
With sizeable gains made in the eight months following an all-time low reached around the time of Britain's vote to leave the European Union (EU) last June, since Jimmy Choo's initial public offering (IPO) in October 2014, the shares in the company renowned for its high-end shoes and exotic bags and made famous by the TV show "Sex and the City", have soared 44 percent.
 
With shares trading 8.6 percent higher at 183 pence, markets reacted positively to the announcement.
 
While management sounded a positive note about gaining better control of overhead expenses and delivering stronger cash conversion metrics, the company recorded like-for-like sales growth of -0.8 percent at the preliminary results release in early March.
 
The business benefited from a weaker sterling boosting U.K. sales to international customers in the wake of the Brexit despite slowing sales growth globally, Tamara Sender, senior fashion analyst at market analyst firm Mintel, said.
 
"In the short-term, the luxury market in the U.K. was boosted by the sharp depreciation of the currency following the Brexit vote, but this situation is unlikely to last as global designer brands adjust their prices to avoid large disparities in pricing across different countries, which can affect perceptions of their brand," Sender explained.
 
"Jimmy Choo continues to have a strong brand name helped by celebrities wearing its shoes, but the footwear market is seeing weaker sales growth in the U.K. and fashion trends have shifted towards more casual shoe styles such as trainers. Jimmy Choo, however, could benefit from heels making a comeback among younger women who are spending more of their extra money on going out," she added.
 
With U.K. retail sales posting their most severe quarterly slip since 2010 during the first three months of 2017, the strategic review comes amid a weak consumer spending backdrop in the fashion brand's home market.
 
According to Ruth Gregory, U.K. economist at Capital Economics, indeed, the -1.8 percent monthly fall recorded for March was sharply lower than the -0.5 percent expected.
 
"March's drop in retail sales suggests that the consumer spending slowdown is gathering pace and adds to other evidence indicating that the economic recovery has slowed since the end of last year," Gregory remarked in a note published last Friday.
 
(Source:www.cnbc.com)