By: Marsol Rosaly
On September 25, 2018, Michael Kors bought Versace for $2.12 billion. Capri Holdings Limited, the newly named holdings company of Michael Kors, now owns Michael Kors Collection, Versace, and Jimmy Choo (acquired in 2017 for $1.2 billion). Before buying the Italian Fashion House, Donatella Versace, along with her brother, Santo, and daughter, Allegra, owned 80% of the company, while Blackstone Group held the other 20%. Capri Holdings is now America’s first global luxury conglomerate.
However, Versace fans took to social media to express their complaints. The company’s followers believe that Michael Kors will not be able to uphold the Versace name and will be the cause of its death. These worries stem from the difference in price, availability, exclusivity, etc. Where Michael Kors has 800+ stores and its products can be found in a variety of department stores, Versace sells their high-priced products only in one of their stores 200 or online through their website.
Nonetheless, since the Donatella, Santo, and Allegra are still going to be part of the company, the company as a whole will not change nor will its mystique. Kors expressed what needs to be modified within the company and his plans for the future. Their main focus is to grow and increase profits. John Idol, CEO of Michael Kors, stated: “The acquisition of Versace is an important milestone for our group. With the full resources of our group, we believe that Versace will grow to over US$2.0 billion in revenues. We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth.” Cowen analyst, Oliver Chen, stated in an article for Business Insider: “Versace needs to grow its direct-to-consumer physical store and online presence… In our view, the online capabilities are behind with respect to social media, fashion, and lifestyle content, shipping speed, and customer engagement; an acquirer could step change innovation online.”
What most people do not understand is its importance. The U.S. now has a luxury fashion group to compete with LVMH Louis Vuitton Moët Hennessy SE, Kering, and Richemont. Due to these much larger European conglomerates, the fashion industry takes place primarily in Europe, through six major companies, including LVMH and Kering. With this new luxury conglomerate, Kors is able to expand his companies within the world’s largest luxury market, the United States, giving them an edge against the European fashion institutions.
Seeing that Versace will still boast its one-of-a-kind haute couture to only a selected few, the only thing that would lead the company astray is if Kors implements its business ethics to enlarge the company and its revenues while forgetting to nurture its truly unique look. The question now is whether Michael Kors will be able to uphold the exclusivity that Versace possesses, or will their drive for profit change its name forever.