Can Jimmy Choo Become a Luxury Sneaker Power Player?
Click here to read the full article.
Google “Jimmy Choo shoes” and the image results will give you a pretty good sense of what the brand has long been about: vertiginous stilettos, bedazzled bridal pumps and strappy high-heel sandals.
Today, however, even luxury consumers aren’t buying these styles like the used to, flocking instead to limited-edition sneakers and more comfort-driven styles. Since the brand was acquired last year by Capri Holdings (then Michael Kors Holdings) for $1.2 billion, it has made forays into the “fashion active” category under the leadership of creative director Sandra Choi. One such style — the chunky, dad-style Diamond sneaker — included a $3,995 Swarovski crystal-encrusted version, and has been a fast seller since it debuted in November. (An even pricier version, featuring smoke-colored crystals, is launching for fall.)
More from Footwear News
What Wolverine, Capri and More Fashion Groups Are Saying About Trump's New China Tariffs
Kaia Gerber Shows How to Pair Her Favorite Combat Boots With a Summer Dress in NYC
Michael Kors Turnaround a Work in Progress as Versace and Jimmy Choo Show Gains
Still, Jimmy Choo is playing catch-up in a fiercely competitive field in which brands like Balenciaga, Gucci, Yeezy and Louis Vuitton are already battling for market share. Jane Hali, CEO of the retail investment research firm Jane Hali & Associates, estimates that sneakers today account for about 10% of Jimmy Choo’s total business. At its investor day in June, Jimmy Choo CEO Pierre Denis announced that the company plans to push that share to 20%, but it has hurdles to overcome in the meantime.
“[Jimmy Choo is] really speaking about this very high heel, spike heel, that you really don’t find as many people wearing, because we’re into a comfort trend. And that’s not going away anytime soon,” said Hali. “Everything is more casual. And they are not.” While shoppers are buying multiples in sneakers every season, she added, they aren’t doing the same in occasion-driven footwear like stilettos.
On Wednesday, Capri Holdings released its first-quarter earnings, reporting flat comparable store sales for the luxury footwear brand and revenue that declined 5.8% on a constant currency basis to $158 million. After last quarter’s strong results – which included a 29% jump in sales — the figures were disappointing, and executives blamed inventory issues for the miss.
Pointing to the Diamond and newly-launched Raine sneakers, Capri CEO John Idol said on the earnings call that the company “got caught off guard” by the styles “moving much more quickly than we had anticipated” and couldn’t replenish fast enough to meet demand. “Given that we are quite frankly out of stock in many cases, we weren’t able to deliver to our own retail stores, and that impacted some of our wholesale shipments in the quarter,” he said.
Despite these issues, Cowen analyst Oliver Chen praised the overall push into new styles, writing in a research note, “New product execution is encouragingly working well across all brands.”
Idol reassured analysts and investors that the brand is fixing the problem, but its comparable-store sales outlook for the next quarter remains flat.
The movement into the active category is part of Capri’s greater ambition to become an $8 billion company, growing revenues from $6 billion today. In December, it finalized its $2.1 billion Versace acquisition, and has since invested in repositioning the brand to give it more heft in streetwear and accessories. At the Italian house, too, sneakers are a top priority, with the Cross Chainer and Chain Reaction line driving growth.
At Capri’s investor day, Idol highlighted the importance of shoes to the group’s future: “The company will be approximately 51% in accessories, 18% in footwear. We believe footwear is one of the fastest-growing categories in luxury today. And we are soundly entrenched in Michael Kors and Versace, and we will begin to become much more broadly based and developed in footwear in Versace.”
This takes time, though, raising the question of whether the market for four-figure sneakers could be at risk if global economic tensions like the trade war between the U.S. and China and uncertainty across Europe continue. Most luxury experts are bullish on the sector’s continued growth, however, even as Asian consumers move to more domestic spending.
“We don’t see that slowing down at all,” said Hali. “Tourism to the U.S. has been down for a while now. So luxury is suffering. But there’s more opportunity to purchase these products within China itself.”
As of the end of its last fiscal year, Jimmy Choo had 94 stores in Asia, 43 in the U.S. and 71 in Europe.
Sign up for FN's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
