Prada is negotiating a deal to acquire Versace from Capri Holdings for nearly €1.5 billion (£1.2 billion). If completed, the deal would return Versace to Italian ownership.
Sources suggest that Prada and Capri could finalize the agreement this month. However, there is still a chance that discussions may not lead to a deal. The acquisition would strengthen Prada’s position as it seeks to compete with French luxury giant LVMH.
Prada Eyes Versace to Expand Market Share
Bringing Versace back to Italian ownership would mark a major shift in the luxury fashion industry. Prada, founded in 1913 in Milan by Mario Prada, has been led by his granddaughter Miuccia Prada since the 1970s.
Capri Holdings, formerly known as Michael Kors, acquired Versace in 2018 after purchasing Jimmy Choo in 2017. If the sale goes through, it would signal a strategic move for Prada, which is looking to grow its global market share.
Versace Faces Financial Challenges
Capri originally bought Versace for $2.1 billion, meaning a sale at $1.5 billion would represent a loss. The brand has faced financial struggles in recent years, with declining sales and an uncertain future.
Capri recently reported that Versace’s revenue dropped 15% in the last quarter of 2024, falling to $193 million. The brand is expected to post losses this financial year but aims to break even in the next. Capri remains optimistic about Versace’s long-term potential, forecasting sales growth to $900 million by 2028.
Uncertainty Over Versace’s Future Leadership
Versace does not manufacture high-demand products like luxury luggage, which have helped brands such as Louis Vuitton maintain steady sales during slow periods. This weakness has made Versace more vulnerable to market fluctuations.
There are also concerns about whether Donatella Versace will continue leading the brand. She has been at the helm since her brother Gianni Versace’s tragic death in 1997. Changes in leadership could impact the brand’s direction and design identity.
Prada Gaining Deeper Insight Into Versace’s Finances
During Milan Fashion Week, Miuccia Prada acknowledged that discussions about Versace were “on everyone’s table.” Prada has completed initial due diligence and has gained access to Versace’s latest financial and sales data.
Meanwhile, Capri faces financial challenges beyond Versace. In February, S&P Global Ratings downgraded Capri’s debt, citing performance struggles and high borrowing costs. The company’s financial position has weakened, making a sale more likely.
Adding to Capri’s troubles, the US Federal Trade Commission blocked an $8.5 billion takeover bid by Tapestry, the parent company of Coach. This setback has further complicated Capri’s future in the luxury fashion market.
With Prada in advanced talks and Versace facing an uncertain future, the deal could reshape the landscape of Italian fashion. Bringing Versace back to Italian ownership would reinforce Prada’s presence in the luxury industry and position it to compete with global rivals.
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