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LONDON — Michael Kors said on Tuesday that it would buy Versace, the Italian fashion house, for $2.1 billion in a bid to challenge Europe’s conglomerates at a time of rapid consolidation in the global luxury market.
The deal, which would end the independence of one of the last prominent stand-alone fashion brands, is the biggest effort yet by Kors to build an empire. To reflect its growing collection of trophy brands, Kors said, the company will change its name to Capri Holdings Limited once the deal is completed.
Kors described the purchase as a milestone in its expansion plans. The Michael Kors brand had its roots in the “middle market” of the luxury sector and relied on outlets and department stores, where deep discounting is common. But mall traffic has declined in North America — Kors’s biggest market — and shoppers were changing, too, increasingly seeking brands at the extreme of the style and price spectrum.
Acquiring Versace, led by the artistic director Donatella Versace, whose flamboyant gowns can sell for thousands of dollars, is part of the company’s strategy to woo more big spenders — and find more loyal customers in Europe and Asia. Last year, Kors bought the shoe designer Jimmy Choo for 896 million pounds, or $1.2 billion at current exchange rates.
“There are very few people you meet and say, ‘I have to work with this person and be a part of their life.’ I had that immediately with Donatella Versace,” said John Idol, the chief executive and chairman of Michael Kors, in a telephone call from Milan.
Kors, in a statement, said it was committed to investing in Versace’s growth, with a goal to increase its annual revenue from $850 million currently to over $2 billion over the next few years, as well as expand its retail network from 200 to 300 stores.
“The brand is one of the best known in the world, with huge reach and enormous growth potential, particularly in accessories and in men’s wear,” Mr. Idol said. “The addition of Versace into the fold is our latest step in creating one of the world’s leading fashion and luxury groups.”
In its announcement, the company indicated a geographical shift in strategy. The purchase will “diversify our portfolio from 66% Americas to 57% Americas, 23% Europe to 24% Europe, 11% Asia to 19% Asia.” Versace was “an opportunity to grow our group’s revenues to $8 billion in the long term.”
The deal is the latest consolidation in the fashion industry, as traditional players have scooped up smaller brands. This year alone Ermenegildo Zegna bought control of Thom Browne, while Puig acquired majority control of Dries Van Noten.
https://www.nytimes.com/2018/09/25/business/dealbook/michael-kors-versace.html
The deal, which would end the independence of one of the last prominent stand-alone fashion brands, is the biggest effort yet by Kors to build an empire. To reflect its growing collection of trophy brands, Kors said, the company will change its name to Capri Holdings Limited once the deal is completed.
Kors described the purchase as a milestone in its expansion plans. The Michael Kors brand had its roots in the “middle market” of the luxury sector and relied on outlets and department stores, where deep discounting is common. But mall traffic has declined in North America — Kors’s biggest market — and shoppers were changing, too, increasingly seeking brands at the extreme of the style and price spectrum.
Acquiring Versace, led by the artistic director Donatella Versace, whose flamboyant gowns can sell for thousands of dollars, is part of the company’s strategy to woo more big spenders — and find more loyal customers in Europe and Asia. Last year, Kors bought the shoe designer Jimmy Choo for 896 million pounds, or $1.2 billion at current exchange rates.
“There are very few people you meet and say, ‘I have to work with this person and be a part of their life.’ I had that immediately with Donatella Versace,” said John Idol, the chief executive and chairman of Michael Kors, in a telephone call from Milan.
Kors, in a statement, said it was committed to investing in Versace’s growth, with a goal to increase its annual revenue from $850 million currently to over $2 billion over the next few years, as well as expand its retail network from 200 to 300 stores.
“The brand is one of the best known in the world, with huge reach and enormous growth potential, particularly in accessories and in men’s wear,” Mr. Idol said. “The addition of Versace into the fold is our latest step in creating one of the world’s leading fashion and luxury groups.”
In its announcement, the company indicated a geographical shift in strategy. The purchase will “diversify our portfolio from 66% Americas to 57% Americas, 23% Europe to 24% Europe, 11% Asia to 19% Asia.” Versace was “an opportunity to grow our group’s revenues to $8 billion in the long term.”
The deal is the latest consolidation in the fashion industry, as traditional players have scooped up smaller brands. This year alone Ermenegildo Zegna bought control of Thom Browne, while Puig acquired majority control of Dries Van Noten.
https://www.nytimes.com/2018/09/25/business/dealbook/michael-kors-versace.html
