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Michael Kors bags Versace for $2.1 bn
LONDON, Sept 26, 2018 (BSS/AFP) – Fashion house Michael Kors announced
Tuesday it had agreed to buy Italian luxury giant Versace, signalling an
intention to move deeper into the international big league after snapping up
shoemaker to the stars Jimmy Choo last year.
Michael Kors, an iconic label rooted in American and New York fashion but
headquartered in London, will pay 1.83 billion euros ($2.1 billion) for
Versace, a statement said.
“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.
“With the full resources of our group, we believe that Versace will grow
to over $2.0 billion in revenues,” he added.
“We believe that the strength of the Michael Kors and Jimmy Choo brands,
and the acquisition of Versace, position us to deliver multiple years of
revenue and earnings growth.”
Idol said that Donatella Versace, artistic director and vice president of
the Italian group, would stay on to lead the label’s creative vision, saying
her “iconic style” was “at the heart of the design aesthetic of Versace”.
Donatella said the takeover was “essential to Versace’s long-term
success”.
She added in the statement: “We are all very excited to join a group led
by John Idol, whom I have always admired as a visionary as well as a strong
and passionate leader.”
– Bags, watches and perfume –
Michael Kors, best known for its bags, watches and perfume, said it
planned to grow the number of Versace stores worldwide by 50 percent to 300,
and expand accessories and footwear from 35 to 60 percent of revenues.
The deal is the latest push by Michael Kors into high-end luxury after it
bought British shoemaker Jimmy Choo in 2017 for $1.4 billion.
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It is seen also as positioning 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.
Shares in Michael Kors were down 0.4 percent at $66.43 in early trading in
New York on Tuesday.
Michael Kors said the acquisition of Versace was expected to help grow its
group’s revenues to $8.0 billion in the long-term, and diversify its
geographic portfolio, pushing further into Asian markets.
Capri Holdings Limited is the new name to be adopted by Michael Kors
Holdings Limited upon the closing of the acquisition, inspired by the Italian
island in the Bay of Naples that has long attracted the international jet-
set.
Versace was the brainchild of Gianni Versace, who was born in Calabria to
a dressmaker mother and presented his first signature collection in 1978,
with his brother Santo taking care of the label’s business arm.
The designer, whose bold designs were embraced by Madonna and other mega-
celebrities, was assassinated in 1997 by luxury-obsessed male prostitute
Andrew Cunanan in Miami.
– Expansion into Asia –
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.
Versace chief executive Jonathan Akeroyd, who is also staying on, said
Tuesday that since joining the company two years ago, “focus has been on
leveraging the company’s heritage and strong brand recognition worldwide”, in
turn helping “to experience significant growth in all regions”.
Launched in 1981, Michael Kors is named after its US founder, the New York
designer with an avid celebrity following who has dressed the likes of
Melania Trump and Michelle Obama.
The 59-year-old Long Island-born self-made tycoon is still creative
director and the company has been through highs and lows, forced to file for
bankruptcy protection in 1993, but able to restructure with an initial
investment by LVMH before going back on the New York Stock Exchange in 2011.
Neil Saunders, managing director of GlobalData Retail, said the deal and
name change signalled the group’s intention to become a luxury powerhouse,
and would give the business a better international reach, particularly in
Europe and Asia.
But he warned it would “absorb both time and money” to position Versace,
however iconic and high-profile, on track for higher growth.
“Capri Holdings now needs to find a way of leveraging all of its brand
assets to make the business worth more than just the sum of its individual
parts,” he said.
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