Michael Kors announced on Tuesday it has agreed to purchase the luxury shoemaker, Jimmy Choo, for approximately $1.2 billion.
If you weren’t aware, many retailers have faced a major drop in sales in that past couple of years.
The fierce competition from online shopping and discount and fast-fashion stores like TJMaxx and H&M.
In an attempt to win over shoppers, Michael Kors has offered heavy discounts.
But that actually ended up diminishing the brand overall.
So what does that mean?
It basically lost the luxury feel.
So as a result, sales took a nosedive, declining 11% in the latest quarter.
And if that wasn’t enough, investors wiped away a 1/3 of the stock’s value within the last year and Michael Kors is in the process of closing 100 to 125 of its standalone stores.
But it does get better.
MK will be renovating another 100+ stores and opting for more innovative designs.
It’s also in consideration to cut down on discounting and selling fewer products in department stores.
It’s in hopes to solve the issue of needing to mark down items in order to sell inventory.
Michael Kors hopes the acquisition will provide a new avenue for not only international growth but also an “in” into the luxury shoe market.
Michael Kors, honorary chairman and chief creative officer, said in a statement:
“We admire the glamorous style and trend-setting nature of Jimmy Choo designs.”