Michael Kors Acquires Jimmy Choo: What Does the Deal Mean for Fashion?

The luxury fashion industry has already seen many changes in 2017. From exciting new creative directions, to unprecedented collaborations that pushed past rigid boundaries, to strategic partnerships between iconic fashion houses, we’ve collectively seen an undeniable shift in the world of fashion as we know it.

By the end of this year, things are likely to change even more. That’s because Michael Kors will be acquiring Jimmy Choo in a brow-raising $1.2 billion deal. The footwear and accessories brand is hoping to bring a new dimension to the already proven and well-established designer handbag brand. What does the deal mean for both brands, and is this a trend that we’re likely to see continue? Let’s break it down the details of the acquisition and how it might affect the future of fashion.

Michael Kors announced the acquisition following intense price competition in the middle-level luxury market and after facing heavy discounts from department stores. It’s no secret that Jimmy Choo, valued at $1.2 billion, has a firm hold on the luxury shoe market and is thriving well despite the changing landscape of fashion.

By acquiring Jimmy Choo, Michael Kors hopes to capitalize on the profitable and high demand market for shoes that has the footwear brand scrambling to stay afloat. In what will be known as a global fashion luxury group, Michael Kors will supply capital and industry resources to Jimmy Choo as they join forces.

But if you were fearing that the sale might tarnish your beloved Jimmy Choo heels, don’t worry. While the acquisition is expected to increase (maybe even double) sales for Jimmy Choo, it won’t mean a drastic, or even noticeable change for either brand, stylistically speaking. The biggest change will be that the footwear brand plans to diversify their product offerings to take advantage of its superior position in the market.

The geographic diversity of Jimmy Choo stores is also very attractive to Michael Kors, who hopes to expand globally and penetrate foreign markets. Experts warn that MK could risk devaluing the brand if they expand too quickly, however. MK is able to dominate markets in the U.S. by saturating those markets and honing in on their focus.

Although both will continue to operate as separate entities, both brands claim to share a similar vision in style and trend leadership, which likely will lead to great success for both.

Last month, Coach announced its plan to acquire Kate Spade in a $2.4 billion deal. The announcement came after a downturn in Coach sales due to dwindling middle-market buyers and in an effort to capture a younger, trendier audience. Both brands will continue to operate as separate entities, but will use the other in a mutual effort to boost sales and create buzz.

What are your thoughts on fashion houses acquiring other brands? Do you believe this trend will continue, and if so, how will it affect the future of luxury fashion?