Fashion crisis: “Devil” may save the failing Versace
Fashion house Prada is considering the possibility of buying the fashion group Versace, which has been put up for sale by its owner, Capri Holdings.
According to sources close to the situation, Prada is working with investment bank Citi to evaluate a possible offer for the luxury brand, Reuters reports.
American Capri Holdings, the owner of Versace, is facing declining sales in the $400 billion global luxury sector.
Declining spending by wealthy Chinese buyers has eroded confidence in the luxury industry and marked the end of an industrial boom.
In November, Coach brand owner Tapestry backed out of buying Capri Holdings in an $8.5 billion deal that would have created an American luxury conglomerate.
The collapse of the deal prompted Capri executives to consider selling their brands, including Versace and Jimmy Choo. Capri has hired Barclays Bank to consider strategic options, and according to some sources, there is even a possibility of selling the entire Capri Holdings group.
Versace accounts for a fifth of Capri’s revenue in the fiscal year ending March 30, 2024, but revenue fell to $1.03 billion from $1.1 billion a year earlier. Versace’s operating margin also fell to 2.4 percent, down from 13.7 percent previously.
Versace was founded by designer Gianni Versace in 1978 in Milan, and quickly became a symbol of luxurious Italian style. The tragic death of Versace in 1997 left a big mark on the brand, but the Versace family continued to run the brand, until it was taken over by Capri Holdings in 2018.
Prada posted 18 percent sales growth in the third quarter of 2024, despite a general decline in the industry, which is why analysts are skeptical of this possible acquisition. They are reminiscent of the failed takeovers of the Jil Sander and Helmut Lang brands in the late 1990s.
Prada’s chief executive, Andrea Guerra, said in May 2024 that the group is not interested in major acquisitions as it focuses on the brands it already owns.
Source: Business diary
Photo: Pexels, screenshot
Source: bizlife.rs
