Jimmy Choo Said Planning to Price IPO at Bottom of RangeRuth David and Andrew Roberts
Jimmy Choo Ltd., the luxury shoemaker owned by JAB Holdings, plans to sell shares at the bottom of its planned range, according to a person familiar with the matter.
JAB, the investment arm of the billionaire Reimann family, will offer a 25 percent stake in the maker of $1,995 Lust peep-toe sandals for 140 pence a share, said the person, asking not to be identified discussing a private matter. The London-based shoemaker narrowed the range of its initial public offering to 140 pence to 160 pence this week, having previously offered shares for much as 180 pence, people with knowledge of the matter said.
Choo, which would have a value of 546 million pounds ($872 million) at the planned offer price, is testing investor confidence after weakening stock markets caused other U.K. companies to shelve plans. Homebuilder Miller Homes Plc and lender Aldermore Group Plc postponed share sales this month, blaming volatile equity markets. The IPO also comes as subdued spending by Chinese shoppers weighs on luxury industry growth, and on share prices.
Choo’s revenue is increasing at a high double-digit pace in China, where it plans to expand, and more than 20 percent in Japan, Chief Executive Officer Pierre Denis said last month. The company, whose shoes were made famous by “Sex and the City” character Carrie Bradshaw, benefits from high brand recognition and limited distribution in Asia, where consumers are tiring of widely available designer labels, according to Neev Capital.
While Choo is a great brand, the company needs to show it can expand margins beyond those of a shoe business to attract investors, said Marino Marin, a managing director at investment bank MLV & Co. The shoemaker is seeking to do so by introducing more profitable products such as handbags and opening directly operated stores. “I am generally not convinced,” Marin said.
Jimmy Choo follows luxury companies including Moncler SpA and Brunello Cucinelli SpA in selling a stake on European stock markets. Shares in both companies have fallen by more than a third this year.
Choo, which was acquired by private-equity investors three times before being bought by JAB for more than 500 million pounds in 2011, sells women’s and men’s shoes, handbags and accessories in more than 100 stores worldwide.
JAB reorganized its business in June, bringing brands including Choo and jacket maker Belstaff under direct management in a move it said reflected an increasing commitment to luxury goods. The shoemaker’s namesake designer left in 2001, followed by co-founder Tamara Mellon a decade later.
No new shares are being sold. Bank of America Corp.’s Merrill Lynch International is organizing the sale as sole sponsor and global coordinator. Merrill and HSBC Bank Plc are joint bookrunners and BHF-Bank is co-lead manager.