Michael Kors is buying the Italian fashion house Versace in a deal worth more than USD 2 billion, continuing its hard charge into the world of high-end fashion.
The deal Tuesday comes just 14 months after the New York handbag maker spent USD 1.35 billion adding to its portfolio Jimmy Choo, the shoemaker that rocketed to fame on the high heels of "Sex and the City." Like others in the fashion industry, Michael Kors Holdings Ltd is trying to fire up sales by cranking up the glamour.
Tapestry, once known as Coach, acquired Kate Spade last year. Like Coach, Michael Kors is changing its name as it seeks to reframe how people in perceive it.
Michael Kors remains the chief creative director at Kors, but the expanding company will be renamed Capri Holdings Ltd., with $8 billion in projected annual sales. Versace will be a key engine of growth, executives said in a conference call Tuesday.
Bringing in Versace adds a layer of glitter to the company, which sells handbags for less than USD 500. Versace bags can fetch five times that figure. Versace's flamboyant styles have invoked collective gasps, perhaps most notably when Jennifer Lopez appeared at the 2000 Grammy Awards in a navel-bearing dress.
Versace's fall styles include midi-dresses with baroque print for USD 2,950, and vinyl skinny jeans for USD 1,250.
It becomes is just the latest major Italian fashion house to be folded into the portfolio of a foreign entity, a trend that has raised no shortage of concern about the future of the made-in-Italy marquee.
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French conglomerates have been the biggest buyers, with Kering buying Gucci, Bottega Veneta and Pomelato and LVMH taking on Bulgari and Loro Piana. The Qatari royal family owns Valentino.
Gianni Versace founded the brand in 1978, becoming a major force bringing to prominence Milan ready-to-wear and serving as a daring, sexy counterpoint to Giorgio Armani's more subdued elegance.
Gianni Versace's flashy, rock 'n 'roll designs and Medusa logo became emblematic of a generation led by Princess Diana and Madonna. He also helped create supermodels, like Naomi Campbell, Cindy Crawford and Claudia Schiffer and was the first to bring celebrities to the front row.
The family-run business was thrown into chaos with Versace's murder 21 years ago. His sister, Donatella Versace, took over creative direction, while his brother Santo continued on the business side. It had been eyeing a public listing for several years.
The Versace family still controls 80 per cent of the company. The investment firm Blackstone owns the remaining 20 per cent.
Donatella Versace presented her latest collection for next spring and summer last Friday during Milan Fashion Week.
"This is a very exciting moment for Versace," she said. "It has been more than 20 years since I took over the company along with my brother Santo and daughter Allegra."
"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."
"All that said, we maintain our view that Versace is not a perfect operation," Saunders said. "While it is iconic and high-profile, there is a lot of work to be done to position it for higher growth. This will absorb both time and money from the group and has to be done in tandem with the ongoing efforts to put Michael Kors firmly on the right track."
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