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Michael Kors buys Jimmy Choo for $1.2B

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Amid plummeting sales and tepid profits, Michael Kors has agreed to buy shoe company Jimmy Choo for roughly $1.2 billion. 

Michael Kors is considered one of the biggest names in affordable luxury, but in May it announced the planned closures of up to 125 retail stores. The company is heavily reliant on outlets and department stores, where deep discounting is common.

Mall shoppers traditionally loyal to the middle market have gravitated toward brands at extremes of the price spectrum. The trends have worked well for e-commerce entities like Amazon, fast-fashion brands like H&M and luxury retailers like Gucci, but it has left Michael Kors exposed, according to New York Times reporting. 

Jimmy Choo occupies a higher price point, with some of its most expensive heels going for nearly $3,000. The brand not only brings a different range of customers, but also hefty profit margins and an upmarket aura. Expansion at the top tier of the market suggests Michael Kors sees its best chance of clawing back growth is with the world’s wealthiest consumers. 

Michael Kors said it expected to open up new Jimmy Choo stores and expand its offerings, according to the Times. It also plans to develop Jimmy Choo’s online presence, in an attempt to fend off threats posed by Amazon. 

The deal comes just months after Coach agreed to purchase Kate Spade, and it’s younger market, for $2.4 billion. 

Read more from The New York Times.

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