Jimmy Choo's a Hot Prospect for Investors -- But Needs to Avoid an IPO
At the risk of adding more grist to the rumor mill, die-hard fashionistas with a fetish for footwear aren't the only ones sniffing out a deal at Jimmy Choo. Those of the pinstriped persuasion have reportedly come knocking, no doubt drooling at the prospect of snapping up the luxury shoe and accessories company which held up admirably during the recession and is expected to post revenues of £150 million, or $231 million. The question is whether team Choo can look past the heaps of potential cash and make a choice that will further the company's development.
Last month, Jimmy Choo's owners were reportedly in talks with investment banking advisers to discuss their options. On the table: a sale which could fetch as much as £500 million or an initial public offering.
Jimmy Choo's trod the path of private ownership since its founder Tamara Mellon partnered with Mr. Choo to create a ready-to-wear shoe company back in 1996. Beginning with one boutique in London along with a strong wholesale business, Jimmy Choo evolved into a high-growth, luxury lifestyle brand -â€" thanks in part to a devoted celebrity following (think Oscars red carpet).
After Mr. Choo sold his equity share in 2001 to Equinox Luxury Holdings, the company introduced handbags and expanded into additional territories. Lion Capital acquired a majority share in 2004, valuing the company at £101 million. In February 2007, TowerBrook Capital Partners, an international private equity firm, acquired a majority stake in a deal which valued the company at £185 million.
Mellon has remained at the helm throughout the firm's evolution and is continuing to lead the brand into other vertical channels including fragrance, a fast fashion collaboration with Sweden's H&M, a proprietary capsule collection 24/7, and an upcoming pairing with Australia's Ugg (re: the latter, let's just be glad that Choo is taking care of the design details â€" the world does not need any more graceless, thick-ankled boots).
And it's Mellon, a former British Vogue accessories editor, whose vision and determination has slipped Choos onto the feet of such Hollywood lights as Cate Blanchett, Halle Berry, and Hilary Swank. Indeed, Mellon's as much the face (and feet) of the brand as any starlet, often photographed trotting about town in her own strappy stilettos.
So while TowerBrook may own 80 percent of Jimmy Choo, Mellon's mere 17 percent â€" the remaining 3 percent shared among board member and former CEO Robert Bensoussan and management â€" belies the true driver of the brand's growth and profitability.
If the company changes hands and goes to another private owner, Mellon can continue building her empire, one vertiginous pair of Choos at a time. An IPO on the other hand, could spell trouble. Putting the company in the hands of stockholders may mean that Mellon's every step would be questioned and put to a vote. Not a great deal for a creative mind that's become used to having investors give her a wide berth to reach her lofty goal of building a $2 billion dollar enterprise.
There's no doubt Jimmy Choo's star is on winning trajectory. The company, like its limited edition styles, may have a horde of eager buyers, but for now, they'll have to wait in line.
Image via Jimmychoo.com
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