Published: Thu, September 27, 2018
Finance | By Kristine Clayton

Italian fashion label Versace sold to Michael Kors

Italian fashion label Versace sold to Michael Kors

A representative for Versace declined to comment on the potential transaction. As part of a new strategic plan, Capri hopes to increase Versace's presence in the accessories space, and increase its global presence to 300 stores, from the 200 it has now.

"The news of Versace's acquisition by Michael Kors Holdings will come as quite a shock to followers, admirers and customers of the iconic Italian brand, which has always been characterised by its fierce narrative and aesthetic as well as its strong family values and independence", said a note from Euromonitor International analyst Florence Allday.

The leader of the pack is every mom's favorite handbag maker, Kors.

Investors were skeptical: Shares in Michael Kors dropped 7% on Monday.

Another measure both brands should take is also separating Michael Kors (the founder) from this process (at least publicly) to help in quelling some of the negative sentiment surrounding the move.

"As such, Michael Kors is not buying a perfectly performing brand, it is buying a brand that needs work and some repositioning".

The Italian fashion icon has been considering a market listing after USA private equity group Blackstone bought a 20 per cent stake back in 2014 to fund overseas expansion, although chief executive Jonathan Akeroyd told Reuters earlier this year there was no rush for a market debut.

An acquisition by Michael Kors would be a landmark deal for the fashion industry, with an American company taking over an Italian icon.

The family has tightly controlled the brand since designer Gianni Versace's murder in 1997. She is artistic director of the fashion house.

"Blackstone wasn't going to put any more money into it. It was overpriced", a source said. "They needed a buyer who could make heavy investments".

The Versace family, which owns 80 per cent of the company, will continue to have a role under any agreement, the people familiar with the situation said.

Models present creations at the Versace show during Milan Fashion Week Spring 2019 in Milan on Friday.

He added, " Versace has struggled to grow sales.

Versace's net profit last year was just under $22.7 million, compared with a net loss of $12 million the previous year.

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