Fashion: Michael Kors bags Jimmy Choo
Michael Kors “has gone shoe shopping to regain its stride,” said Saabira Chaudhuri in The Wall Street Journal. The luxuryhandbag firm announced this week that it’s buying high-end shoe brand Jimmy Choo for $1.2 billion, as it grapples with a slowdown in its signature business. Handbag sales, “once the main driver of growth in the luxury-goods industry,” grew only 2 percent last year. Women’s shoes, meanwhile, have enjoyed 9 percent compound annual growth over the past decade, compared with 5 percent for the luxury sector as a whole. It’s the first acquisition for Michael Kors, which plans to pursue similar deals for other luxury brands.
“Jimmy Choo could be just the right fit,” said Marc Bain in Qz.com. Michael Kors pioneered the “affordable luxury” concept, occupying the middle ground between mall chains like J.Crew and pricey designer labels from Europe. “For a long time, that positioning was a sweet spot, but recently the bottom has fallen out as shoppers have flocked to the high end and low end.” Michael Kors apparently hopes Jimmy Choo “will give it an upmarket foothold to stabilize its business.” Handbag rival Coach has successfully pursued a similar strategy. Its 2015 acquisition of shoemaker Stuart Weitzman has generated “solid growth.”
Europe: Greece returns to the bond markets
Greece may be turning a corner on its financial woes, said Liz Alderman in The New York Times. Investors “eagerly snapped up” newly issued Greek debt this week, in the country’s first bond issuance in three years. The sale, which raised 3 billion euros ($3.5 billion), “was intended to show that Greece may be able to stand on its own two feet again” when its $100 billion international bailout ends next year. But the five-year bonds have a return of 4.625 percent, a borrowing cost for Greece that is “markedly higher” than those for other European nations, reflecting the country’s continued risks.
Tech: Alphabet profits dinged by antitrust fine
Google’s parent company, Alphabet, added to its substantial cash pile this week, reporting “a growth rate that is rarely seen among companies its size,” said David Ingram and Rishika Sadam in Reuters.com. The tech giant reported a 21 percent jump in quarterly revenue yearover- year, to $26 billion, with $3.5 billion in net profit. “The profit would have been much larger but for a record $2.7 billion European Union antitrust fine.” The company’s stock briefly traded above the $1,000 mark on the news—a threshold it has crossed only a handful of times before.
Autos: Britain to ban sale of diesel, gas cars by 2040
“The internal combustion engine was dealt another blow” this week, when the British government announced a ban on the sale of new gasoline and diesel cars by 2040, said Eric Sylvers in The Wall Street Journal. The decision, which follows a similar commitment in France, comes amid fears that poor air quality poses a major risk to public health. “London is facing record levels of pollution,” and some 23,500 deaths in Britain are linked to pollution each
Energy: Exxon sues government over sanctions fine
Exxon Mobil is fighting a $2 million government fine for violating U.S. sanctions against Russia, said Collin Eaton in the Houston Chronicle. The U.S. Treasury fined the world’s largest public energy company last week for inking oil and gas deals in May 2014 with Igor Sechin, the CEO of Russian oil company Rosneft. Sechin had been placed under U.S. sanctions a month before, in response to Russia’s military aggression in Ukraine. Hours after the fine was announced, Exxon filed suit, alleging that the deals were not with Sechin personally, but with Rosneft, which was not under U.S. sanctions at the time. Secretary of State Rex Tillerson was CEO of Exxon when the deals were signed. ■