Saturday, 20 October, 2018

Michael Kors makes high-end fashion statement with $2.2 billion Versace buy

Italian designer Donatella Versace arrives to meet employees in Milan Italian designer Donatella Versace arrives to meet employees in Milan Italy
| 26 September, 2018, 18:48

Michael Kors Holdings Ltd. has reached a deal to buy Italian fashion house Gianni Versace SpA, as the US conglomerate expands its global fashion luxury group.

"We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth", said Michael Kors chief executive John Idol.

He redesigned his mother's wedding dress for her second marriage and designed clothes from the basements of his parents home in her teenage years.

There are understandable concerns that, under the new regime and structure, Versace's fashion culture will be "dehumanized", as many other independents have been when they've become part of a portfolio. As brands struggle to adapt, some, like Kors, are turning to the fashion conglomerate model to stay afloat amid such flux.

Neil Saunders, managing director of the consultancy GlobalData Retail, said that it was essential for Donatella Versace to remain with the company. Versace artistic director Donatella Versace, sister of Versace founder Gianni Versace, "will continue to lead the company's creative vision", Idol said.

"This feels achievable and we believe Versace can benefit from Michael Kors'infrastructure, human capital, and relationships, but will require spending to distinguishthe brand in an increasingly competitive landscape, improve its appeal with the millennialdemographic, and elevate its distribution", Konik said.

'It has been more than 20 years since I took over the company along with my brother Santo and daughter Allegra.


"But Michael Kors could bring much-needed modernisation to the label in an era when sexy doesn't sell quite like it used to, and perceived Italian rival Gucci continues to innovate, winning the attention and spend of younger, globally minded shoppers".

Investment from Michael Kors, does bode well, however, if its recent acquisition of Jimmy Choo (for £896m last year) is anything to go by.

Capri has already laid out its plan to turn Versace into a more accessories-focused brand comfortable with selling online.

Versace adds high-end couture credibility and heritage to Kors.

CEO John Idol said: 'Donatella's iconic style is at the heart of the design aesthetic of Versace.

The deal is expected to close in the fiscal fourth quarter.

Michael Kors confirmed the purchase of Versace on Tuesday in a press release. Shares of Michael Kors fell more than 8 per cent after news reports of the deal first surfaced.

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