Catey Hills / MarketWatch – We hate to stomp on your stiletto-fueled dreams, but Jimmy Choo shoes — which shot to popularity when they were featured on HBO’s hit show “Sex & the City,” as well as on the heels of celebs and royalty — may lose some of their cachet in the near future, some analysts say.
On Tuesday, luxury shoe brand Jimmy Choo announced that it would pursue an initial public offering later this year. Company owner JAB Holdings seeks a company valuation of around $1 billion and plans to sell at least 25% of Jimmy Choo at the end of October. The company, which plans to open between 10 and 15 stores a year, sees Asia as a strong growth market.
“This is an interesting move, as it’s the first luxury shoe to make an IPO move like this, on any stock exchange,” says Bob Heaney, the research director and principal analyst of Aberdeen Group’s retail and consumer markets practice. “A lot could happen to the brand after it goes public.”
While this IPO news will likely make some investors salivate, what will it mean for Jimmy Choo’s loyal fashionista audience, many of whom are willing to pay upwards of $1,000 for a pair? That depends on who you ask.
For its part, the company says it will use the money from the IPO to “pursue growth without compromising the brand.” As Pierre Denis, Jimmy Choo’s chief executive, puts it: “Jimmy Choo is a clear success story with strong momentum and I am confident that our future as a public company can only extend our reputation and position in this attractive sector.”
And some analysts agree. Will McKitterick, a retail analyst with IBISWorld, says that this IPO has the potential to “draw more talented designers, which could enhance the brand.” In other words, the IPO might mean more and better shoe styles to choose from, he explains. And Jeff Green, the owner of Jeff Green Partners, says that men in particular might benefit, as Jimmy Choo might expand its men’s offerings after the IPO.
But others point out that this IPO could come with some risks. “It’s very difficult for a high-end luxury brand to be a public company that has short-term financial goals … it puts a lot of stress on the exclusive distribution and careful pricing models that are essential to a brand’s cachet,” says Forrester Research analyst Sucharita Mulpuru-Kodali. “You can’t Jordache-ify the brand.”
Paula Rosenblum, the managing partner of RSR Research, notes that going public, at least in the longer term, means that Jimmy Choo risks becoming “overexposed,” which could reduce its prestige.
“The Street is a voracious beast,” demanding more and more sales and store expansion, which can make a brand far less exclusive, she says. And once that happens, you have the Michael Kors (KORS) phenomenon, she adds — in which the brand no longer seems high end to its once exclusive fashionista audience. (In other words, many high-end shoppers don’t want to buy items once “the masses” have shoved their feet into them.)
Still, analysts say that Jimmy Choo may be able to do this move well. Mulpuru-Kodali says that Jimmy Choo has a chance to stay true to its chic roots, as Burberry did when it went public: “So long as Jimmy Choo doesn’t dilute the core footwear and accessories line they should be OK, she says. “But if they start to dilute it, that would be disastrous for the brand.”