Investment group puts Jimmy Choo, Bally and Belstaff up for sale
today Apr 24, 2017
Big news from Jimmy Choo. The company announced a strategic review on Monday morning saying it is looking at “various strategic options to maximise value for its shareholders and it is seeking offers.”
Its majority shareholder, JAB Luxury GmbH, which owns a 67.66% stake in the firm, said it is supportive of the process. But that simple statement really didn’t tell the whole story.
That’s because it was what was going on elsewhere in the JAB control centre that really counted here and as Monday wore on, it emerged that the firm is looking to sell its nine-year investment in Bally too. The reason? Coffee and doughnuts. The investor has made major coffee shop and other café/dining investments of late and luxury/fashion is now non-core.
That’s why it wants to wave goodbye to Jimmy Choo and Bally. Oh, and don’t forget Belstaff, which is its third big upscale fashion investment. That appears to be on the block too. So Jimmy Choo has a for sale sign on it, a review for Bally is due to start soon and should complete later this year, and Belstaff? Well, the timing is unclear at the moment.
But with a major trio of brands set to come onto the market relatively soon, there are exciting times ahead for anyone with several hundred million to spare, who wants to get into the luxury sector or to expand existing operations.
For now though, it’s Jimmy Choo that’s the focus as the only business that has officially been put on the block so far. And while usually, we’d say that no sale is guaranteed, with JAB determined to refocus on its newer interest area, it clearly does want to sell. The question is, will it do so at any price?
The surprise announcement of Jimmy Choo being for sale came after the company has reported a series of strengthening results that have seen its share price rising fast in the past year and its market capitalisation settling somewhere between £600 million and £700 million.
At one point a year ago, its shares could be picked up for less than £1 each, but they surged 11% on Monday and closed at £186.50.
The company remains a relatively small player compared to some of the world’s global luxury giants. Its annual net profits of below £20 million and sales of £349 million are significantly smaller than those of its luxury peers.
By contrast, Burberry’s recent half-year revenue was £1.6bn and its half-year wholesale turnover was almost the same as Choo’s full-year total sales. However, Choo remains significantly larger than a brand like accessories-focused peer Mulberry and its improving results mean this certainly won’t be a fire sale.
The big question now is who would buyJimmy Choo? Its recent return to growth is likely to make it attractive to a number of parties, including private equity firms, deep-pocketed investors in countries like China and Qatar, as well as the world’s acquisition-hungry luxury and premium giants such as LVMH, Kering, Richemont, Coach and more.
Will they also want Bally and Belstaff? Any or all of the companies JAB controls could obviously appeal to these players, but Choo will be the short-term focus.
Despite Choo's business in the Americas remaining sluggish in its latest year, its sales have been rising and store conversions have also boosted turnover. Even in the US, it said last month that sales trends had improved over the past year, and it was also upbeat as it saw continued strong growth in Asia, plus solid growth in Europe and Japan. As Ebitda grew almost 16% in the financial year, the company said its men’s business grew, as did accessories as a percentage of the sales mix.
Watch this space for any developments as this story looks set to run and run.
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