Versace Will Never Be the Same

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On the 25th of September 2018, Chanel became the last independent European luxury brand as the Italian fashion label Versace, synonymous with the decadent glamour of the 80s and 90s, was bought by Michael Kors Holdings for $2.1 billion dollars. With profits of only $17.5 million last year, the Wall Street Journal has called the offer “a rich one.” Owning major brands Michael Kors Collection, Versace and Jimmy Choo (purchased for £896 million last year), Michael Kors Holdings is being renamed Capri Holdings Limited. Capri Holdings Limited will compete against Tapesty in the US, owner of Kate Spade and Coach, however It hopes to rival more the established luxury goods conglomerates Kering and LVMH.
Versace’s management will remain unchanged, as was the case with Jimmy Choo – the acquisition of which saw the group’s revenue rise by 26.4% in the quarter ending June 2018. LVMH, Richemont and Kering all considered acquiring Versace but passed, hence why Kors paid a premium for the brand. This implies there is a flaw in Versace’s management, ergo Capri Holdings could be making a mistake by affording Versace the same autonomy as it would receive under LVMH. Regardless, news of the acquisition has sparked outcry from Versace fans who are concerned that the easy American style of Michael Kors Collection will dilute the luxurious, risk-taking glamour of Versace.

Versace’s Creative Director, Donatella Versace, considers the acquisition an opportunity to grow. Though this doesn’t entail a change in Versace’s aesthetic, plans for growth include increasing the number of Versace stores from 200 to 300 and making footwear and accessories sales accountable for 60% of revenue, up from 35%. Capri Holdings Believes that with their resources, Versace’s sales will grow to $2 billion up from $509 million in 2016. This could potentially see Versace, like Michael Kors Collection, expand into mass-retailers. This must be done with caution, as it could bring Versace downmarket, despite the brand being purchased to bring Capri Holdings further upmarket.

 TTYL

 See Also: Demna Gvasalia Made a Killing Making Ugly Fashionable

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