Italian luxury powerhouse Prada Group has acquired Versace from Capri Holdings, the owner of Jimmy Choo and Michael Kors, in a deal valued at $1.37 billion.
The transaction is expected to close in the second half of the year, pending regulatory approvals.
Speculation about a sale had been circulating for months, though recent market uncertainty might have cast doubts about the feasibility of a deal.
Both Prada Group and Capri Holdings’ shares have fallen since the start of the year, but the sale appears to be part of a strategic decision to refocus Capri on its flagship Michael Kors brand.
“This transaction reflects our commitment to increase shareholder value, strengthen our balance sheet and power the future growth of Michael Kors and Jimmy Choo,” said Capri chief executive John D Idol in a statement.
Versace was put up for sale after Capri’s proposed merger with Tapestry, owner of Coach and Kate Spade, was blocked by the US Federal Trade Commission in November. Capri had acquired Versace in January 2019 for more than $2.1 billion.
“We are delighted to welcome Versace to the Prada Group and to build a new chapter for a brand with which we share a strong commitment to creativity, craftsmanship and heritage,” said Prada Group chairman and executive director Patrizio Bertelli.
“Our organisation is ready and well-positioned to write a new page in Versace’s history, drawing on the group’s values while continuing to execute with confidence and rigorous focus.”
The writing was on the wall when Donatella Versace stepped down as creative director in March after 30 years. She was by her brother Gianni's side when he launched the house in 1978 and was his muse for every collection. When he was murdered in 1997, she stepped up and took control, continuing his vision through her own grief.
Her departure made way for Dario Vitale, former design director of Prada sister brand Miu Miu, to step in. Vitale is credited, in part at least, with the recent sales surge at Miu Miu, which has tapped into the desires of younger clients.
Revenue has been declining at Versace, a challenge Prada will have to address. This is due to slowing global demand for luxury goods, as well as a perception that Versace’s design direction is somewhat tired, as The National’s Sarah Maisey recently noted.
Vitale’s first mission will be to reinvigorate Versace with fresh creative energy, the same kind that has made Miu Miu a recent industry success story.
With the acquisition, Versace joins Prada Group’s portfolio of luxury brands that also includes Miu Miu, Church’s, Car Shoe, Marchesi 1824, and Luna Rossa.
The sale comes during global economic uncertainty, with shifting US trade policies prompting companies worldwide to reassess supply chains and revise forecasts. But the tone at Prada is positive.
“The acquisition of Versace marks another step in the evolutionary journey of our group, adding a new dimension, different and complementary,” said Prada Group chief executive Andrea Guerra. “The group’s infrastructure is strong, we have verticalised our brands’ organisations and reinforced our routines and processes.
“We feel ready to open this new chapter. Versace has huge potential. The journey will be long and will require disciplined execution and patience. The evolution of a brand always needs time and constant focus.”
For Versace, a return to Italian ownership may be well-timed amid rising American economic isolationism, which is likely to affect luxury spending. Whether coming home is the right move in the long run will depend on how quickly the brand can rediscover its vitality.
