It’s official: Michael Kors buys Versace, company to be renamed Capri Holdings Limited

The rumors were true: Michael Kors Holdings Limited has confirmed the acquisition of Italian luxury house Gianni Versace S.p.A for a total value of 1.83 billion euro (approximately 2.12 billion US dollars).

“The acquisition of Versace is an important milestone for our group. Versace was founded in 1978. For over 40 years, Versace has represented the epitome of Italian fashion luxury, a testament to the brand’s timeless heritage",said John D. Idol, Chairman and Executive Officer at Michael Kors, in a statement. “We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth. With the full resources of our group, we believe that Versace will grow to over US$2.0 billion in revenues”.

Idol added that Donatella Versace, who served as Versace’s vice-president and artistic director, will continue to “lead the company’s creative vision”. Versace’s management team will continue to be led by the same Chief Executive Officer, Jonathan Akeroyd.

“It has been more than 20 years since I took over the company along with my brother Santo and daughter Allegra. I am proud that Versace remains very strong in both fashion and modern culture”, said Donatella in the statement. “Santo, Allegra and I recognize that this next step will allow Versace to reach its full potential”.

Michael Kors Holdings Limited to be renamed Capri Holdings Limited

Michael Kors Holdings Limited also informed it is going to change its name to Capri Holdings Limited, in order to signal its new status as a global luxury conglomerate. Last year, the company purchased luxury footwear label Jimmy Choo. Santo, Allegra and Donatella Versace will become shareholders of the new company. “This demonstrates our belief in the long-term success of Versace and commitment to this new global fashion luxury group”, explained Donatella.

The new name is inspired by the fabled island which has long been recognized as an iconic, glamorous and luxury destination.

The company believes the acquisition of Versace enhances the company’s economic value and will drive improved long-term shareholder value by accelerating long-term revenue and EPS growth potential. On a non-GAAP basis the acquisition is expected to be dilutive to earnings per share in the high-single digits in fiscal 2020, accretive in the low-single digits in fiscal 2021, and accretive in the high-single digits in fiscal 2022.

Capri Holdings aims to grow Versace to 2 billion dollars entity

The company also shared its plans for Versace's long-term growth: they aim to grow the label to 2 billion dollars in revenues globally, as well as building on Versace's luxury runway momentum and enhance the brand's marketing. Aditionally, Capri Holdings Limited intends to increase Versace's global retail footprint from 200 to 300 stores, approximately. Accelerating the label's e-commerce and expanding its accessories and footwear portfolio are also part of the plans.

Capri Holdings Limited believes the acquisition of Versace will provide it with an opportunity to grow the group’s revenues to 8 billion dollars in the long-term. Versace will also allow the company to diversify its geographic portfolio: the Americas, now responsible for 66 percent of the company's revenues, will represent 57 percent. Europe will go from 23 percent to 24 percent, while Asia is expected to grow from 11 percent to 19 percent.

Contributed: Marjorie van Elven

Picture by Rahi Rezvani, courtesy of Michael Kors