By COLLEEN BARRY Associated Press
MILAN (AP) — The Prada Group closed the purchase of Milan fashion rival Versace in a $1.375 billion cash deal that puts the fashion house known for its sexy silhouettes under the same roof as Prada’s “ugly chic” aesthetic and Miu Miu’s youth-driven appeal.
The highly anticipated deal is expected to relaunch Versace’s fortunes, after middling post-pandemic performance as part of the U.S. luxury group Capri Holdings.
Prada said in a one-line statement that the acquisition had been completed after receiving all regulatory clearances. Capri Holdings, which owns Michael Kors and Jimmy Choo, said the money would be used to pay down debt.
Donatella Versace welcomed the deal in an Instagram post, which also marked the birthday of the brand’s late founder, her brother, Gianni Versace.
“Today is your day and the day Versace joins the Prada family. I am thinking of the smile you would have had on your face,” she wrote in a post that also featured a 1996 photo of Gianni Versace with Miuccia Prada.
Versace’s future
Prada heir Lorenzo Bertelli is set to steer Versace’s next phase as executive chairman, in addition to his roles as group marketing director and sustainability chief.
The son of co-creative director Miuccia Prada and longtime Prada Group chairman Patrizio Bertelli has said he doesn’t expect to make any swift executive changes at Versace, although he also noted that the company, which is among the top 10 most recognized brands in the world, has long been underperforming in the market.
Prada has underlined that the 47-year-old Versace brand offered “significant untapped growth potential.”
The appeal of the deal is that it combines “the minimalist Prada (with) a maximalist Versace,” said Luca Solca, an analyst at Bernstein Group consulting firm, meaning that the brands don’t compete for the same customers.
Versace is “long past its heydey,” Solca said. “The challenge and the opportunity is to make it relevant again.. .. They are going to have to invent something which is going to make the brand attractive, desirable and interesting again.”
Versace already has begun a creative relaunch under a new designer, Dario Vitale, who previewed his first collection during Milan Fashion Week in September. He was previously head of design at Miu Miu, but his move to Versace was unrelated to the Prada deal, executives have said.
The runway show received mixed reviews, but the collection itself — a colorful, revealing riff on the 1980s — got good feedback from buyers. “I think that this seems to be a promising first step,” Solca said.
Breaking from the past
Capri Holdings paid $2 billion for Versace in 2018, but had been struggling to position the brands’ bold profile in the recent era of “quiet luxury.”
Capri Holdings chairman John D. Idol said in a statement that “Prada is the ideal partner to guide this celebrated luxury house into its next era of growth.”
Versace represented 20% of Capri Holdings’ 2024 revenue of 5.2 billion euros.
Prada said when the deal was announced in April that Versace would represent 13% of the Prada Group’s pro-forma revenues, with Miu Miu coming in at 22% and Prada at 64%. The Prada Group, which also includes Church’s footwear, reported a 17% boost in revenues to 5.4 billion euros last year.
Prada’s in-house manufacturing
The Prada Group has already begun preparations to incorporate crosstown rival Versace into its Italian manufacturing system, a point of pride for the group.
“Making a bag for one brand or another, the know-how is the same,” Bertelli told reporters last week at the group’s Scandicci leather goods factory, which already makes bags for the Prada and Miu Miu brands and will soon add Versace.
Artisans stitched handles onto leather bags, and cut leather with laser machines inside the leather goods factory, where trainees were learning the trade as part of Prada’s 25-year-old academy. It has trained some 570 new artisans in an in-house training program in the Tuscany, Marche, Veneto and Umbria regions.
Last year, Prada hired 70% of the 120 artisans who trained in the academy. The number of trainees rose by 28% to 152 this year.
The Prada Group has invested 60 million euros in its supply chain this year, including a new leather goods factory near Siena, a new knitwear factory near Perugia, as well as increasing production at its Church’s footwear factory in Britain and expanding another Tuscan factory. That’s on top of 200 million euros in investments from 2019-24.