Italian fashion group Prada buys rival Versace

Prada Group has completed the purchase of Milan fashion rival Versace in a US$1.375 billion (1.93 billion CDN) cash deal, which puts the fashion house known for its sexy silhouettes under the same roof as Prada’s “ugly chic” aesthetic and Miu Miu’s youth-driven appeal.

The highly anticipated deal is expected to revive Versace’s fortunes after a post-pandemic underperformance as part of US luxury group Capri Holdings.

Prada said in a one-line statement that the acquisition is complete after receiving all regulatory approvals. Capri Holdings, which owns Michael Kors and Jimmy Choo, said the money would be used to pay off debt.

Donatella Versace welcomed the deal in an Instagram post, which also coincided with the birthday of the brand’s late founder, her brother, Gianni Versace.

“Today is your day and the day you join the Versace Prada family. I’m thinking of the smile on your face,” she wrote in a post. Which also included a 1996 photo of Gianni Versace with Miuccia Prada.

future of versace

Prada heir Lorenzo Bertelli is set to lead Versace’s next phase as executive chairman, in addition to his roles as group marketing director and sustainability chief.

Patrizio Bertelli, son of co-creative director Miuccia Prada and longtime Prada Group president, has said he does not expect any quick executive changes at Versace, though he also noted that the company, which is among the world’s top 10 most recognized brands, has long been underperforming in the market.

Prada underlined that the 47-year-old Versace brand offered “significant untapped growth potential”.

The appeal of the deal is that it combines “a minimalist Prada (with) a maximalist Versace,” said Luca Solca, managing director of the luxury sector at the Sanford C. Bernstein research firm, meaning the brands don’t compete for the same customers.

Versace “has long passed its heyday,” Solka said. “The challenge and the opportunity is to make it relevant again… They have to invent something that makes the brand attractive, desirable and interesting again.”

Versace has already begun a creative relaunch under a new designer, Dario Vitale, who previewed his first collection during Milan Fashion Week in September. He was previously head of design at Miu Miu, but his transfer to Versace was unrelated to the Prada deal, executives have said.

The runway show received mixed reviews, but the collection – which was a colorful, revealing riff on the 1980s – received a good response from buyers. “I think this appears to be a promising first step,” Solka said.

break with the past

Capri Holdings paid US$2 billion for Versace in 2018, but has struggled to establish the brand’s bold profile in the recent era of “quiet luxury”.

John D. Idle, chairman of Capri Holdings, said in a statement that “Prada is the ideal partner to guide this renowned luxury house into its next era of growth.”

Versace represents 20 percent of Capri Holdings’ 2024 revenues of 5.2 billion euros ($8.4 billion Cdn).

When the deal was announced in April, Prada said Versace would represent 13 percent of Prada Group’s pro-forma revenues, with Miu Miu coming in at 22 percent and Prada at 64 percent. Prada Group, which also includes church shoes, reported a 17 percent increase in revenue last year to 5.4 billion euros (8.8 billion CDN).

The Prada group has already begun preparations to integrate crosstown rival Versace into its Italian manufacturing system, a matter of pride for the group.

“Making bags for one brand or another, the technology is the same,” Bertelli told reporters last week at the group’s Scandicci leather goods factory, which already makes bags for the Prada and Miu Miu brands and will soon add Versace.