Market Overview

Michael Kors Says It Will Continue Shopping For More Acquisitions

Michael Kors Says It Will Continue Shopping For More Acquisitions

Initial reaction to Michael Kors Holdings Ltd (NYSE: KORS)'s $1.2 billion acquisition of London-based luxury shoe maker Jimmy Choo on Tuesday was positive. The stock gained more than 3 percent ahead of the opening bell, but by mid-morning the stock erased all of the gains and was lower by more than 4 percent before staging a rebound.

If investor sentiment turned from optimism over M&A activity to disappointment then investors could be in store for more pain, according to the company's CEO John Idol. The executive told CNBC in a phone interview that the acquisition of Jimmy Choo "will not be [the] last acquisition."

Michael Kors' management is focused on building a "luxury group" portfolio of many brands as part of a new objective of returning to growth by 2018, Idol added. To help this goal the company will focus on brands that target an international luxury consumer.

The executive also argued that the brand it acquired isn't over-exposed in the marketplace — a common complaint among shareholders who believe the brand's over-exposure dilutes its appeal. But the company may be keeping this in mind as it won't be selling Jimmy Choo products inside of its Michael Kors-branded stores and will slow down the pace of new Jimmy Choo store openings.

Finally, Jimmy Choo isn't a brand that requires any "significant change in the product or marketing strategy" and there is no need for any turnaround strategy.

Related Links:

Michael And Jimmy: A Budding Courtship In High-End Fashion?

The Bag With The Swag: Coach Initiated At Buy After 'Game-Changer' Kate Spade Acquisition


Image Credit: By Arroser - Own work, CC BY-SA 3.0, via Wikimedia Commons

Posted-In: Apparel CNBC Jimmy Choo John Idol luxuryM&A News Media Best of Benzinga


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