Michael Kors Buys Versace for $2.1 Billion
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Michael Kors buys the iconic Versace for $2.1 Billion. This may be old news to some but if you’re a late bloomer, this should be wowing you right now! That’s right, Michael Kors the luxury handbag maker has gone high-end. Kors has purchased the luxury high-end fashion house, Gianni Versace, including debt, which has expanded the MK brand to extend their global market into the European luxury market. Much like their rival Tapestry, the parent company of Coach, Kate Spade, and Stewart Wiseman, after the deal closes Michael Kors will change its name officially to Capri Holdings but will keep hold of the Michael Kors name.
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The brand plans to vastly expand and grow Versace up to $2 Billion in revenue, helping to expand the stores from 200 to 300 in number, while expanding the footwear and accessories from 35 to 60 percent in revenue. But, don’t get too worried Donatella Versace, who has been running the company since 1997 will still be overseeing the brand while her brother and daughter will stay as shareholders of the company. Current CEO Jonathan Akeroyd will remain. The global market in 2017 for personal luxury goods was estimated at $307 billion, while the luxury market is expected to reach a whopping $446 Billion by the year 2025. Most would be surprised to hear that this wasn’t the first high-end luxury buying venture, just last year Michael Kors bout Jimmy Choo for $1.2 Billion. It’s safe to safe that the brand has a clear understanding of what it takes to survive in the high-end European luxury market, LVMH the owner of some very influential high-end luxury brands like Givenchy, Balenciaga, Yves Saint Laurent, and former Versace.
Kors hopes that this new deal will allow his brand to be taken more seriously especially in luxury brands. He plans to decrease his U.S. proportion from 66 to 57%, increasing Asian business from 11 to 19%, and expanding his European business 1% from 23 to 24%. Although Michael Kors and rival Tapestry have since expanded their brands purchasing high-end luxury and affordable luxury brands, the e-commerce market has shown striking increasing numbers challenging the retail market quite extensively.
Source: Las Vegas Review-Journal
More recently Versace fans have been more than upset about the deal and have vicariously expressed their concern. Calling the Michael Kors brand cheap and tacky, often quoting the Gianni Versace name claiming he would be incomplete rebuttal if he were here. While loyal Versace fans cry, morn, or cheer with excitement it is important to note that the Versace family is still in control and they are more than excited to sale and expand their market.
Source: NBC Washington
“This is a very exciting moment for Versace,” she said about the sale. “It has been more than 20 years since I took over the company along with my brother Santo and daughter Allegra. I am proud that Versace remains very strong in both fashion and modern culture. Versace is not only synonymous with its iconic and unmistakable style, but with being inclusive and embracing of diversity, as well as empowering people to express themselves. Santo, Allegra and I recognize that this next step will allow Versace to reach its full potential.”
Hirsch, L. (2018, September 25). Michael Kors to buy Versace for $2.1 billion, will change its name to Capri Holdings. Retrieved from https://www.cnbc.com/2018/09/25/michael-kors-to-buy-versace-laying-claim-to-european-luxury-market.html
McDermott, M. (2018, September 25). Versace fans lash out at Michael Kors as ‘the tackiest man alive’ following brand’s sale. Retrieved from https://www.cnbc.com/2018/09/25/versace-fans-lash-out-at-michael-kors-as-the-tackiest-man-alive.html