In May, it downgraded its sales forecasts for the rest of the year, and said it would close as many as 125 of its full-price retail stores. Its share price has lost a fifth of its value in 2017.
The deal for Jimmy Choo could give it a new avenue for growth.
Michael Kors is heavily reliant on the outlets and department stores that have been hammered by changing shopping habits, meaning its products are often heavily discounted. But Jimmy Choo is in a higher price bracket than Michael Kors, and it attracts a different range of customers, bringing hefty profit margins and an upmarket brand aura.
“We believe that Jimmy Choo is poised for meaningful growth in the future,” John D. Idol, the Michael Kors chairman and chief executive, said in a news release. “We are committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years.”
The shoemaker was founded in 1996 by Tamara Mellon, then accessories editor at British Vogue, and the Malaysian cobbler Jimmy Choo. It shot to fame thanks to a slew of celebrity patrons, including Diana, the Princess of Wales, and the actress Sarah Jessica Parker, who embraced its signature sky-high stilettos and the vampish aesthetic for which it became known.
After three cycles of private equity ownership, it became the first luxury footwear brand to list on a public market in 2014. Prices range from $425 for flat shoes to $1,795 for over-the-knee suede boots, while small clutch handbags start around $700, according to Jimmy Choo’s website.
Michael Kors said it expected to open new Jimmy Choo retail stores and develop the brand’s online presence, and to expand the assortment of its fashion offerings.
The deal came just months after Coach agreed to a $2.4 billion deal to buy American handbag brand Kate Spade, apparently hoping that the combination of two affordable luxury brands could help it carve out new territory in a crowded market.
“Michael Kors follows the path of Coach — and again, on steroids,” said Luca Solca, a luxury goods analyst at Exane BNP Paribas. Mr. Solca said that after “a meteoric rise and spectacular crash,” American luxury brands like Michael Kors were looking to “recycle cash into other brands.”
Jimmy Choo put itself up for sale in April as the Reimann family, the reclusive German consumer goods billionaires who had owned it, looked to reduce their luxury holdings.
The shoemaker announced record annual revenue and profits in March, aided by robust sales in Asia and a fillip from a weaker pound, which increased the value of overseas revenue.
After the transaction, Jimmy Choo will operate under its existing management team, including the chief executive, Pierre Denis. It has more than 150 stand-alone stores as well as a presence in many of the world’s top department stores.
Under the terms of the transaction with Michael Kors, Jimmy Choo investors would receive 230 pence for each share they own, representing a 36.5 percent premium to the share price in April, before the company announced it was putting itself up for sale.
Shares of Jimmy Choo closed at 195 pence on Monday.
Jimmy Choo said its board of directors intended to unanimously recommend that shareholders vote in favor of the transaction. JAB Holding, a Reimann company and Jimmy Choo’s largest shareholder with a 67.7 percent stake, has agreed to support the takeover.
“A combination with Michael Kors will allow Jimmy Choo to embark on its next phase of growth and provide opportunities for the benefit of Jimmy Choo customers, employees, shareholders and other stakeholders,” Peter Harf, the Jimmy Choo chairman, said in a news release.
JAB Holding also said in April that it was undertaking a strategic review of the Swiss leather goods brand Bally. A review of Belstaff, the British motocross-inspired brand acquired in 2008, is also expected.
The privately held Reimann company has built a coffee and food empire in the United States in the past five years by acquiring American coffee businesses, including Peet’s Coffee & Tea, Caribou Coffee and Keurig Green Mountain. In April, it agreed to buy the sandwich chain Panera Bread for $7.5 billion, including debt.
Goldman Sachs and J.P. Morgan advised Michael Kors, while Bank of America Merrill Lynch and Citigroup advised Jimmy Choo.