Capri Holdings, which owns the brands Versace, Michael Kors and Jimmy Choo, announced the sale of the Versace fashion house. Italian fashion giant Prada is among the potential buyers. It is reported Reuters.
Capri Holdings, whose shares are listed on the US stock exchange, has faced a decline in sales in the global luxury goods market, which is estimated at $400 billion. The main reasons for the decline were a reduction in spending by Chinese consumers and the end of a long economic boom.
In November 2024, Tapestry, which owns the Coach brand, backed out of a deal to buy Capri for $8.5 billion. This prompted the management of Capri Holdings to consider the possibility of selling some of the company’s brands, including Versace and Jimmy Choo.
Among those interested in acquiring Versace are private equity firms and competitors in the luxury goods sector. Prada, which has already worked with Citi to evaluate the deal, is considering the acquisition. Analysts are skeptical, however, given the differences between the brands. If Versace is known for its bright and bold style, Prada gravitates towards minimalism and restraint.
Versace’s value is estimated at $1.75-$2.19 billion (excluding debt). However, the brand’s financials are deteriorating, with revenue falling to $1.03 billion in 2024 and operating margin falling from 13.7% to 2.4%.
Experts point to challenges Prada may face in the event of a deal: the need to reorganize distribution and reduce the volume of wholesale sales, as well as adapting Versace’s aesthetics to modern trends.
Prada CEO Andrea Guerra stated back in May 2024 that the company does not plan large-scale acquisitions and focuses on developing its own brands. This calls into question the likelihood of a deal.
As a reminder, Versace, founded in 1978 in Milan by Gianni Versace, remains a symbol of luxury with recognizable prints and the Medusa motif. However, the brand faces serious difficulties, which make it difficult to find a new owner. The company has faced crises in the past. In 2008, during the global economic crisis, Versace had to reorient sales from Japan to China in order to remain competitive.
Despite its heritage and recognition, the brand needs a refresh to meet the modern challenges of the luxury industry. This can make it difficult to negotiate a sale, even with significant interest from potential buyers.
It should be noted that in 2008, luxury goods manufacturers were significantly affected by the crisis, which forced many of them to close their outlets in certain countries. During this period, Versace also had to reorient its sales from the Japanese market to the Chinese market.
