Michael Kors has just lost his deal with Coach for Kate Spade. And the transition plan has been effective Coach different, Michael Kors’s performance is still not ideal. As of December 31 last year, the brand’s sales fell 1.8% to $ 3.3 billion, net profit fell 12.5%, only $ 579 million.
The acquisition of Jimmy Choo can help Michael Kors expand its footwear category, while adding a more high-end brand. Michael Kors is currently less than 11% of revenue from footwear, and this category in Jimmy Choo accounted for 75%. And other light luxury brands, in order to save the brand image, improve performance, Michael Kors has been trying to cut the exposure of different products in different channels to reduce discount promotions.
But some analysts believe that Michael Kors needs to think about whether the acquisition of other brands is a more effective way than buying shares. Michael Kors has a market capitalization of $ 5.8 billion, only 1.3 times its revenue; and Jimmy Choo’s market capitalization of $ 1.2 billion, is 2.5 times the sales.
“Now Michael Kors’s market capitalization is basically the level of the IPO in 2011, and its stock is much cheaper than its peers, and I’m curious why it’s going to buy other companies instead of investing in their own stock.” Jefferies Analyst Randal Konik told WWD.