On the Runway
By VANESSA FRIEDMAN and CHAD BRAY
Is coffee a better business than fashion?
The Reimann family, the reclusive German consumer goods billionaires who control JAB Holding, seems to think so.
On Monday, the luxury shoe brand Jimmy Choo, in which JAB owns a 67.6 percent majority stake, announced it was putting itself up for sale. JAB acquired the brand in 2008 for approximately $800 million and took it public in 2014.
JAB is also undertaking what it called a strategic review of the Swiss leathergoods brand Bally, “including a possible sale of the company.” A review of Belstaff, the British motocross-inspired brand acquired in 2008, is expected to follow soon.
The potential sell-off of JAB’s luxury brands comes as the Reimanns’ investment arm — which since 2012 has built a coffee and food empire in the United States, acquiring a variety of American coffee brands, including Peet’s Coffee & Tea, Caribou Coffee and Keurig Green Mountain — agreed this month to buy the sandwich chain Panera for $7.5 billion, including debt.
According to documents seen by The New York Times, “JAB has however made significant investments in coffee and related areas in recent years, and as a result, now considers its investment in luxury as noncore.”
JAB, which has its headquarters in Luxembourg, wants to focus on its investments in Coty, where it owns a 36.84 percent stake, and the numerous high-end coffee businesses, which also include Stumptown Coffee Roasters and Intelligentsia Coffee & Tea.
Shedding its investments in the three leathergoods companies would take JAB out of the fashion industry, ending an eight-year effort to build a viable luxury group to compete with the Big Three — LVMH Moët Hennessey Louis Vuitton, Richemont and Kering — and possibly signaling further consolidation in an industry already wrestling with slowing growth and changing consumer tastes. The strategy shift also speaks to the increasing desire of consumers to spend money on experience — including their morning drinks of choice — instead of, say, handbags.
JAB entered the luxury market with fanfare in 2007, soon snatching up brands such as Derek Lam, the American-based designer; the Italian handbag label Zagliani (then known for using Botox in its exotic-skinned totes and purses to keep them supple); the British jeweler Solange Azagury-Partridge; and leathergoods names like Choo, Bally and Belstaff, all under a new division called Labelux.
Only four years later however, it had sold its stakes in the Lam and Azagury-Partridge businesses to the brands’ founders, and in 2014 decided to refocus on leathergoods, bringing the remaining brands directly under control of JAB Holding (it closed Zagliani in 2015). Though Jimmy Choo became the first footwear brand to list on a public market, riding a wave of accessories successes, Bally struggled to define itself in a crowded market, taking tentative steps in apparel without much impact. Belstaff, too, despite a much-heralded campaign with David Beckham, found it difficult to break through.
Now that grand experiment is, apparently, at an end.
According to the JAB announcement, there have not been any bids thus far for Jimmy Choo, but the industry is bound to be watching closely to see which interested parties declare their intent. This is especially the case, given that footwear is something of a buzzing industry of the moment, with department stores seemingly competing over who can open the largest shoe floor (a title now held by the Level Shoe District in Dubai, at 96,000 square feet). Indeed, since the news broke, the price of Jimmy Choo shares has climbed more than 9 percent.