Jimmy Choo sold for $767m: Five things you can learn from the luxury brand

Jimmy Choo, the hand-made shoe company beloved by fashionistas, has been sold for more than £500 million ($767 million), delivering a nice windfall to its private equity owners and fresh hopes for premium fashion houses.

The purchase by Labelux, the private luxury brands company from Germany which owns Swiss shoe brand Bally, takes the number of owners Jimmy Choo has had in its short life to four. And according to Bloomberg, Jimmy Choo has been a winner for vendor TowerBrook Capital Partners, which is understood to have made more than three times its initial equity investment.

The company has not let the GFC get it down– it found its niche, and built. Since TowerBrook teamed up with Jimmy Choo founder Tamara Mellon and other Jimmy Choo employees to nab control of the company from Lion Capital in 2007 for £185 million, it has doubled its store numbers to 120. And its new owner says the company is growing in all categories and regions by 10%, having reported net sales of £150 million in 2010.

So beyond splashing some hard-earned on a pair, how else can we step into Jimmy Choo’s shoes?

1. 1. Have a good story

The company’s story is a good one, with the eponymous Malaysia-born shoemaker said to have made his first shoe at just 11 years of age. According to reports, he then opened a workshop on London, where he gathered plenty of positive press and eventually joined forces with former Vogue accessories editor Tamara Mellon in 1996. And even the company’s most recent sale is a good story: tapping into the growing economic might of Asia, and the region’s increasing ability to snap up pricey fashion. TowerBrook co-CEO Ramez Sousou says “substantial potential awaits the Jimmy Choo brand, particularly in Asia.” The new owner agrees, spruiking Jimmy Choo’s “enormous growth potential”, while research firm Euromonitor has tipped luxury show sales will lift 20% annually to 2013. The new owner plans to add new stores in mainland China, where there are currently two outlets.

1. 2. Get passionate (unpaid) brand ambassadors and build word-of-mouth

Jimmy Choo wasn’t the first fashion house to harness celebrity culture for its own ends, but it is perhaps one of the best known over the past decade, with references on seminal New York dramady Sex and the City lifting its profile, and before that counting Princess Di among the company’s devotees. Most recently, its Macy sandals were reportedly worn by Oscar-winning actress Reese Witherspoon at her wedding.

1. 3. Sell well and keep credibility

While TowerBrook Capital Partners initially planned an IPO for Jimmy Choos, a trade sale proved the best option, with fellow private equity TPG believed to be the underbidder. And while Labelux will take over from here, the company’s credibility is helped by keeping its founder, Tamara Mellon, and chief executive Joshua Schulman, involved after the purchase.

1. 4. Discount on your own terms

Like all companies, premium fashion houses have had to adjust to the GFC, but the successful ones have done it on their own terms. Jimmy Choo shoes continued to be expensive during the downturn – ranging from hundreds of dollars to thousands – but the company seemingly succeeded in maintaining margins and exclusivity, while making the brand available to a wider clientele. The key has been diffusion lines, with limited-edition shoes stocked in department stores to present the brand to value-conscious but upwardly mobile women. Its expansion into handbags, men’s shoes, sunglasses, leather goods, perfume, sneakers and scarves has also helped the group produce an average annual growth rate of 30% since 2001.

1. 5. Use social media

Jimmy Choo has been a good user of social media to promote its wares, most recently its new runners in London, where it asked fans of the brand to follow it on Foursquare. It told people that if they were the first to come and find them when it checked in somewhere, they would win a pair of Jimmy Choo trainers. “But be quick because we’ll only stay a few minutes,” it said. That strategy was dubbed “simple, light, and creative with smart use of the existing social media channels.”