Losses for Jimmy Choo are in excess of £360 million for the year ending 31 March 2020. Find out why…
Small Beginnings but Rapid Growth
Jimmy Choo cofounded his namesake brand with British Vogue accessories editor Tamara Mellon in 1996. The £150,000 capital for the launch was made possible by a loan from Mellon’s father.
With help from various private equity owners, Jimmy Choo grew at a tremendous pace. In 2011, under Peter Harf leadership, JAB acquired the brand for £500 million and Tamara Mellon received £85 million from her small initial investment.
Michael Kors Acquisition
In 2017 Jimmy Choo had an estimated turnover at £400 million with estimated operating profits of £35 million. In July 2017, Michael Kors made an offer to purchase the brand from JAB and its small shareholders for £896 million ($1.2 billion). Just over a year later, Michael Kors purchased Versace for £1.64 billion ($2.1 billion). After closing the deal, Michael Kors Holdings was renamed Capri Holdings.
Success under Pierre Denis
Under Pierre Denis’s reign of 8 years as CEO from 2012 to 2020, the brand had estimated accumulative operating profits of £205 million to 28 March 2020. Turnover grew to £447 million in the year ending March 2020 but made a small operating loss of £10 million due primarily to the impact of the COVID-19 pandemic.
The Shit Hits the Fan
Then the situation at Jimmy Choo took a turn for the worse. The brand’s financial performance was marred by a gigantic write down in the value of the brand’s assets by £350 million. A write-down means that the value of various assets, primarily its stores, is reduced to match its current market value. The Jimmy Choo charge of £350 million effectively wiped out all the operating profits from the Denis era plus many previous years of the brand’s historical operating profits.
Pierre Denis left Jimmy Choo in June 2020 and Hannah Colman, who joined the brand in 1996 as a store manager, was named his official replacement in September 2020. Peter Harf remains the Chairman of the brand.
Back to Square One?
Can Jimmy Choo ever recover from the write-down? Does it need to reach out more to celebrities and influencers? Will Capri try to divest? Whatever happens, Jimmy Choo is on a steep and winding path to redeem its former glory.
Read Inside the brand: Jimmy Choo to find out more
Post written by Holly Marshall
