Michael and Medusa: The 2.1 Billion Dollar Kors-Versace Deal
Late September, in a deal that cost the equivalent of building over seven Ryan Field-houses, Michael Kors Holdings Limited purchased Versace. The 2.1 billion dollar deal establishes the all-American Michael Kors brand in the European market by firmly entrenching it within the conglomerate of luxurious Italian fashion houses. With both Jimmy Choo and Versace now under its belt, Kors Holdings is rebranding itself as Capri Holdings Limited, though the umbrella company is the only one changing its name. The name change, paying homage to the lavish Italian island, is indicative of the growth in reach of the holding company. While the idea of Kors owning Versace lent itself to many jokes on social media, the underlying question that many people had was apparent: what does this really mean?
From left to right: Jonathan Akeroyd, Donatella Versace, John D. Idol.
It’s no secret that Michael Kors and Versace have two very different looks. The former typifies the American style while the latter is representative of the sexy, Italian allure that pulls people into the brand in the first place. The sheer difference between the two created concerns about the direction the Italian fashion house would be taking, leaving many feeling as if Gianni Versace himself had just died twice over. Alas, the dramatic worries of the loyal fans are unwarranted, Donatella Versace isn’t giving up the reins just yet. Similar to when Kors Holdings purchased Jimmy Choo, Donatella is going to be staying on as the creative director of her namesake, which means the risk-taking, Medusa-embossed looks will continue. The iconic brand is also going to retain its luxury status, much to the dismay of those hoping to acquire it at Michael Kors prices. Instead, Kors itself is looking to rebrand as more luxurious than how its current status, hoping to phase out department store availability and many of the discounts that it regularly offers customers.
As Kors looks to decrease its own stores, Capri Holdings is working on expanding the availability of Versace with plans to increase the number of stores from 200 to 300 and boost the brand’s online footprint. Michael Kors itself has a foot in multiple facets of the industry with their items ranging from clothing to handbags to jewelry to shoes. John Idol, the chief executive of Michael Kors, wishes to bring this multiple avenue approach to Versace, in which he hopes to build the Italian’s brand reach within accessories and footwear. It’s clear that the deal holds a promise of economic profit for both companies. While the big name European brands are typically seen as extremely profitable, according to Business of Fashion, Versace actually ran losses from the late 1990s to 2011. With the plans of increasing brand availability and expanding within markets, Capri Holdings looks to increase Versace’s total revenue.
With Donatella remaining at the helm through this deal, there is no doubt that Versace will retain the iconic look the brand’s fans have come to know and love. The push to expand within accessories and footwear will mean even more of the classic Versace look available in the market whereas Michael Kors looks to rebrand to be more luxurious. While the deal came as a surprise to many, the Kors-Versace deal holds a promise of good things to come from both brands.
