Michael Kors Buys Versace for $2.12 Billion

Editorial • 27/09/18

Versace ‘Made in Italy’, owned in America. Michael Kors has announced a $2.12 billion deal to buy the Italian fashion house Versace. With it, the entity that is Michael Kors Holdings will rename to Capri Holdings.

Versace was one of the final few major fashion houses to operate independently, up until four years ago private equity firm Blackstone bought a 20% stake in the business, and with the new acquisition by Michael Kors, this move sees Blackstone now exit entirely.

So what is the plan for Versace?

Kors and Co plan to increase the number of Versace outlets from 200 to 300 stores. Expanding accessories and footwear from 35 percent to 60 percent of revenues. And plans to double turnover to $2 billion in the process. The logic here is that these categories are often more affordable and faster-selling.

Michael Kors and Versace are two brands who do and do not fit well together. Equally they both play the glamour card. So tick. However they both deal at different ends of the market and therefore price spectrum.

Define Versace?

Versace, is Italian fashion: constant glamour and sex appeal throughout the years from the reign of Gianni, through to Donatella, all served at a high price point.

Versace is a power brand and as such a household name, a loyal connection to celebrities dominating red carpets to silk shirt clad rappers sporting the infamous Medusa logo that Gianni Versace made iconic for the brand.

Celebrities became icons from Versace dresses, such as Jennifer Lopez, who wore that infamous green silk dress with that plunged to her navel. As well as Elizabeth Hurley, who sported 'that' Versace safety pin dress, again rising her to stardom. Recent collections have included the ‘Tribute’ series, which brought back printed icons and silk prints all found within the 90’s Gianni era, the success of which dominated instagram feeds for months upon end .

Define Michael Kors?

Michael Kors launched his brand in 1981 and has built his empire selling the ‘American jet-set’ dream lifestyle. His accessible luxury approach was defined by his muse, this delicate yet athletic woman always clad in neutral tones. The glossed hair swooped back when either entering or departing a private jet whilst covered in gold accessories. In other words, my life looks like the Hamptons, but I am the invited guest.

Kors aimed and earned from the mid-market audience, dominating shopping malls by focusing on accessories ranging from MK bags and watches, which at one point was seen all over America and Europe. In the process becoming his own household name.

The New Luxury Behemoth

LVMH, Kering and Richemont are the dominating forces across the fashion and luxury industries, snapping up luxury brands with their excess cash. They have become synonymous with fashion and as a result are exerting immense pressure and difficulty for smaller brands to take any market share.

So is Capri Holdings the new and first American Behemoth that is to take on the European giants. Well with the acquisition of Jimmy Choo last year for $1.2 billion and now Versace under the umbrella, these are good starting points to pivot into being a qualified competitor. And these acquisitions are not rare, the aforementioned struggle for younger brands has seen Missoni announce that after 60-plus years as a family-owned business, it has agreed to sell a minority stake of its brand to a private equity venture backed by the Italian state. In addition  Dries Van Noten sold a majority stake to Spanish luxury perfume conglomerate Puig in June.

What do most say?

Well most is the masses and like all credible sources (insert eye roll) Donatella Versace’s Instagram feed has felt the wrath. Fans have voiced their fears and horror about the sale and expressed their concerns with comments such as: “Donatella why would you sell Versace? it’s an iconic Italian brand. i’m a proud Italian, why would you sell it to an American brand?”

If there is anything  go on to alleviate fan fears, Mr. Idol,  Michael Kors chief executive said, "Having Ms. Versace stay on at the creative helm of the brand was an 'essential component' of the sale"

 

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