Michael Kors buys Versace for $2.1bn
Fashion giant Michael Kors has successfully acquired iconic Italian fashion brand Versace for $2.1 billion (£1.64bn). This is following last year’s acquisition of shoemaker Jimmy Choo.
Michael Kors shares started taking off in 2014 after Kors took the company public in 2011. Having gained popularity through their affordable range of accessories, most famously their signature tote bags, sales started dropping in recent years. In 2017 plans were announced to close 125 stores. As spending moves more and more to online platforms physical stores have been suffering. As a result Michael Kors is making the push into higher end luxury.
The acquisition of British brand Jimmy Choo last year for nearly £900m. was the first step into this direction and resulted in a 26.3% rise in revenue at the end of Q2 in 2018 with Jimmy Choo making a reported 17.2% contribution.
Now, the Michael Kors group is uniting the three brands into a new company called Capri Holdings. The brand is setting itself up as fierce competition for both Tapestry Inc. which encapsulates Coach and Kate Spade, in the US and European fashion groups such as LVMH.
Capri Holdings plans to double Versace’s turnover to $2bn. by increasing the number of outlets by another hundred stores and boosting the percentage of footwear and accessories. “We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth,” John D. Idol, chairman and chief executive officer of Michael Kors Holdings Limited said, “We are extremely fortunate to be able to acquire such an extraordinary brand with an incredibly talented team.”
Similar noises of excitement can be heard on the Versace side, though the sale marks a big change for the family owned company. “This is a very exciting moment for Versace,” Donatella Versace, vice-president and artistic director, stated, “We believe that being part of this group is essential to Versace’s long-term success.” According to her the family believes that Versace being sold will help the company reach its full potential.
Donatella Versace has been at the head of the company with her brother Santo and daughter Allegra for the past twenty years and will continue in this capacity. The three family members are all set to become shareholders.