The Manila Times

Versace close to deal with Michael Kors

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NEW YORK: Hallowed Italian fashion house Versace, one of the few remaining big names in the business under family control, is close to a deal to be acquired by growing luxury juggernaut Michael Kors,

- day (Tuesday in Manila).

Michael Kors, whose roots are in the United States but which is headquarte­red in London, could announce a deal as soon as this week, said the reports, which cited unnamed sources.

The news reports varied on the size of the deal, with some saying $2 billion and one report at $2.4 billion. Some accounts said Donatella Versace, the brand’s iconic leader, would continue to have a role with the company after the deal.

Donatella Versace, artistic director and vice-president of the group, has called a staff meeting in Milan for Tuesday, according to the Corriere della Sera newspaper.

The deal would be the latest push by Michael Kors into highend luxury after it bought Jimmy Choo PLC in 2017 for $1.4 billion. The brand was started in 1981 and named for its founder, who was born in Long Island, New York.

The transactio­n would be intended to position Michael Kors more fully as a competitor to Paris-based LVMH and Kering and the Swiss company Richemont among global heavyweigh­ts in luxury across various product lines, analysts said.

“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 characteri­zed by A Versace store in New York.

“However, several years of a dif

- ing growth and stiff competitio­n from brands like Louis Vuitton, Gucci and Dior, make the sale less surprising.”

Neither Versace nor Kors responded to a request for comment.

Versace was the brainchild of Gianni Versace, who was born in Calabria to a dressmaker mother and

in 1978, with his brother Santo taking care of the label’s business arm.

But the designer, whose bold designs were embraced by Madonna and other mega-celebritie­s, was the victim of a bizarre slaying in 1997 by luxury-obsessed male prostitute Andrew Cunanan in Miami.

Twenty percent of Versace, known for its Medusa head logo, was bought by US private equity group Blackstone in 2014, and the family owns the rest.

The group boasted sales of 686 million euros in 2016 ($760 million) and turnover is expected to exceed one billion euros in the “short term,” CEO Jonathan Akeroyd said in June.

Michael Kors’s sales in 2017 were $4.7 billion, up from less than $800 million in 2011 when the company went public.

The company is still especially well known as a maker of handbags and for its founder who appeared on reality-show “Project Runway.” Michael Kors has dressed Michelle Obama, Melania Trump and celebritie­s such as Jennifer Lawrence and Taylor Swift.

The company has been working closely with Chinese actress and singer Yang Mi to build brand awareness in that country, executives said in an earnings conference call in August. The company has opened 24 new stores over the last year in Asia.

Chief Executive John Idol told analysts in August he was pleased with the John Choo line’s performanc­e in luxury but said he took his “hats off” to some competitor­s in the high-end space who achieved “incredible” growth.

The deal would give Michael Kors the ability to “properly compete with Kering’s power brand, Gucci,” said Euromonito­r analyst Allday, noting that the consolidat­ion in the fashion creates risks of for smaller brands that stay independen­t “of being left behind” and unable “to afford the exposure” of a bigger company.

A Versace acquisitio­n “would certainly push the group into the

in the luxury space,” GlobalData Retail’s Neil Saunders said of Michael Kors. “However, it is also the case that

- gled to grow sales,” Saunders said. “As such, Michael Kors is not buying a perfectly performing brand, it is buying a brand that needs work and some reposition­ing.”

Shares of Michael Kors fell 7.4 percent to $67.35 in afternoon trading in New York.

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AFP PHOTO

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