Why Michael Kors Is on the Verge of Buying Versace

Why Michael Kors Is on the Verge of Buying Versace

The strategy follows moves by other fashion companies.

Donatella Versace, who has helped run the family company since her sibling Gianni was murdered in 1997 (see: The Assassination of Gianni Versace: American Crime Story for details), has reportedly called an all-staff meeting to announce the sale to Kors & Co on Tuesday.

But word that a deal is close sent Kors shares down nearly 9 per cent to as low as US$66.33 in NY on Monday, the biggest intraday drop since May 30.

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

Last year, Versace brought back former top models Carla Bruni, Claudia Schiffer, Naomi Campbell, Cindy Crawford and Helena Christensen to the fashion house's catwalk.

Michael Kors didn't respond to a request for comment.

It also cited rumours saying that the buyer could be USA fashion group Michael Kors Holdings Ltd's (KORS.N) or jeweler Tiffany & Co (TIF.N).


"We believe that some of the work required on Versace, which includes toning down some of the brasher elements of the brand which are out of step with the more subtle tone preferred by modern consumers, are precisely the issues with which Michael Kors has struggled and has yet to satisfactorily resolve", Mr Saunders said. Just past year the handbag designer purchased British shoe label Jimmy Choo for $1.7 billion AUD. Bloomberg and Reuters news agencies later reported the buyer would be fashion group Michael Kors.

US private equity firm Blackstone, which bought 20 percent of Versace back in 2014, will fully exit its investment. "It was overpriced", the source said.

"Blackstone wasn't going to put any more money into it".

The Versace family still owns 80% of the company. Allegra Versace, Gianni's niece owns 50% of the stake, her mother Donatella owns 20% and Gianni's older brother, Santo, owns 30%.

Blackstone, whose stake acquisition valued Versace at $1.4 billion in 2014, declined to comment. Its chief executive, Jonathan Akeroyd, said earlier this year that he expected the brand to achieve sales of more than €1bn (£895m) in 2018, up from €686m in 2016, the latest available figures.

He added that the biggest challenge for Versace will be to re-energise the brand and make it relevant to younger generations, particularly in Europe and Asia, while keeping a smooth and productive relationship with the family.

Versace's net profit last year was just under $22.7 million, compared with a net loss of $12 million the previous year.

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