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On Thursday, Prada (PRDSY) formally agreed to buy Versace from US luxury conglomerate Capri Holdings (CPRI) for $1.38 billion, uniting the two Italian fashion brands under one roof.
The transaction, which is expected to close in the second half of the year, values Versace at less than the $2.12 billion Capri paid for the brand in 2018. In a press release, the company stated that the sale allows Capri "to make accelerated strategic investments in Michael Kors."
Prada’s acquisition of the Medusa-emblazoned fashion house marks the brand’s return to Italy. Versace will join Prada Group's $15 billion portfolio of brands, including its flagship brand, Prada, as well as Miu Miu, Church’s, Car Shoe, Marchesi 1824, and Luna Rossa.
"The Bertellis have long aspired to build an LVMH-like group in Italy," Pauline Brown, former LVMH chair of North America, told Yahoo Finance via email. "The acquisition of Versace brings their portfolio up to seven. As I see it, it’s a smart strategy, as it gives the Prada Group more breadth and depth of Italian brands and a stronger position within the global luxury sector."
In 2024, the Prada Group reported total revenue of 5.4 billion euros (around $6 billion), a 17% increase year over year. Prada's second-largest brand, Miu Miu, particularly bucked a slowdown in luxury retail last year, reporting a 93.2% increase in retail sales, according to its shareholder report.
LVMH (LVMUY), the world's largest luxury brand, brought in nearly 85 billion euros ($95 billion) last year, while Hermès reported revenue of 15.2 billion euros (nearly $17 billion).
Throughout the years, luxury retail brands have consolidated to become more competitive: There's Kering (KER.PA) with Bottega Veneta, Balenciaga, and others, and Tapestry (TPR) with Coach, Kate Spade, and Stuart Weitzman. And that's what Capri was doing when it put Versace, Jimmy Choo, and Michael Kors under its American umbrella.
When Capri Holdings acquired Versace in 2018, executives thought it would be an opportunity to help grow Versace's revenue to $2 billion, Jimmy Choo's to $1 billion, and Michael Kors's to $5 billion. But after four years of poor performance, Capri Holdings explored the sale of Versace and Jimmy Choo as the businesses continued to struggle.
In 2024, Versace reported $1 billion in revenue, while Jimmy Choo’s full-year revenue was $618 million. Capri's largest brand, Michael Kors, reported $3.5 billion in revenue. Across all brands, Capri Holdings brought in $5 billion. Capri is also rumored to be looking to sell Jimmy Choo.