Michael Kors buys Versace, changes its name to Capri

NEW YORK/PARIS: Michael Kors Holdings Ltd will buy Italian fashion label Gianni Versace SpA for €1.83 billion ($2.2 billion), bringing the American luxury company closer to its goal of becoming an international house of fashion brands.

The US fashion group said yesterday that it planned to increase Versace’s sales to $2 billion annually, more than double the current level, expanding the number of stores globally to 300 from about 200 and accelerating e-commerce development.

Michael Kors also said it would rename itself Capri Holdings Ltd as it develops its multibrand luxury strategy.

“The acquisition of Versace is an important milestone for our group,” Michael Kors chief executive John Idol said in a statement. “We are committed to investing in its growth.”

The Versace deal is the third billiondollar acquisition made by Kors or chief competitor Tapestry Inc since early last summer, as the two rivals shop for high-profile fashion labels to add to their portfolios.

Coach-owner Tapestry bought handbag label Kate Spade for $2.4 billion last year and Kors purchased high-end shoemaker Jimmy Choo about two months later for around $1.2 billion.

Versace adds high-end couture credibility and heritage to Kors. The 40-year-old fashion house, founded by Gianni Versace, celebrates extravagance with its baroque designs, filling runway shows and red carpets with brash prints and vibrant color.

Though it boasts a sizeable presence in pop culture, Versace has struggled to increase sales and attract new shoppers, especially in China, even as luxury conglomerates LVMH Moët Hennessy Louis Vuitton SE and Kering SA race ahead.

As a privately-held company, Versace does not disclose its financial details.

Documents filed with the Italian Chamber of Commerce in 2017 show that the fashion house collected sales of €668 million, or about $786.5 million, and reported €44.6 million, or $52.5 million in earnings before interest, tax, depreciation and appreciation.

The brand has been at its most prominent in years since a hit show in September 2017 brought back the most iconic looks from founder Gianni’s 1990s collections and designer Donatella Versace co-hosted New York’s Met Gala in May, dressing such pop culture icons as Gigi Hadid and Kim Kardashian.

Michael Kors aims to lift Versace’s accessories and footwear to 60% of sales from 35%, an ambitious goal for a company known better for its readyto-wear fashions.

Michael Kors has been undergoing a revitalisation with its new multibrand structure in place, after years of heavy discounting and strong competition took a toll on the business.

Jimmy Choo’s performance lifted Kors in the last quarterly results, though Michael Kors brand comparable store sales — a key retail metric — remained flat.

The renamed company said it aimed to lift sales to $8 billion “in the long term” from about $5 billion as the latest deal expands its presence outside the US.

Versace is still controlled by the family of Gianni, who was killed in Miami in 1997. Donatella, his 63-yearold sister, is the house’s creative director and will continue to lead the company’s creative vision, according to Idol. Jonathan Akeroyd, currently Versace’s CEO, will continue to lead the management team.

The family will also receive €150 million of the purchase price in shares of Capri Holdings.

The deal is expected to close in the fourth quarter.