BANGALORE (Reuters) - Jones Group Inc JNY.N said it had acquired upscale British shoe retailer Kurt Geiger from private equity firm Graphite Capital to increase its foothold in the international luxury market.
The deal is valued at about $350 million including assumption of about $100 million in debt, Jones Group said.
The deal comes in the heels of iconic luxury footwear company Jimmy Choo being bought by Labelux from TowerBrook Capital Partners LP.
Labelux bought Jimmy Choo for $812 million, sources had said.
The U.S. luxury sector had a strong 2010 as the stock market rally made people more comfortable about buying fancy items and many American brands are now looking at international markets to boost growth.
Kurt Geiger had sales of about $332 million for the year ended on April 30.
The deal is expected to immediately add to earnings per share, Jones Group said.
Jones, whose brands include Nine West and Stuart Weitzman, said owning Kurt Geiger will increase its international presence to just below 20 percent of overall sales.
It will also give Jones inroads into established platforms like Harrods and Selfridges, where Kurt Geiger shoes are sold, while helping the British brand to take advantage of Jones infrastructure.
“Our concern, honestly was not the price. Our concern was to strengthen the company with someone who could really help us strengthen the strategy on a global scale,” Kurt Geiger Chief Executive Neil Clifford told Reuters.
“Jones has been doing it for years with Nine West. So the synergies are very exciting. Of course we wouldn’t have sold the company at a very low price, but it wasn’t the most important thing,” Clifford said.
Jones, which saw strong sales offset any hurt from rising costs of raw materials, has been open about its intentions to buy brands to expand its current portfolio. It bought designer shoe company Stuart Weitzman in May last year to expand its reach into luxury goods.
“We have lots of room to grow with our existing brands, and we really haven’t identified the gaps in our portfolio,” Jones Group Chief Executive Wesley Card said in an interview.
“We do like the higher end luxury market and we are looking at different opportunities in that market because we think it’s more profitable,” he said.
Jones shares fell 4 percent to $11.28, their lowest in a year, in midday trade on Thursday on the New York Stock Exchange, against a 1.2 percent fall in the larger S&P Retail Index .RLX
Reporting by Nivedita Bhattacharjee; Editing by Gopakumar Warrier