For Sale?

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The world was shocked when word got out that Michael Kors would be purchasing Versace for $2.2 billion!

Why would Donatella sell? To Michael Kors of all people? Michael Kors has $2.2 billion to spend? Why does Michael Kors even want Versace?

Michael Kors is on his way to owning a powerhouse, international luxury group similar to LVMH (Louis Vuitton, Gucci, Dior, Givenchy, etc.) or Tapestry (Coach, Kate Spade and Stuart Weitzman). Going by the name of Capri Holdings, this brand will consist of Michael Kors, Jimmy Choo and now Versace.

With its Italian heritage and history of being apart of cultural trends, Michael Kors saw the potential in Versace! His strategy is pretty similar to LVMH’s vision for Gucci: embrace luxury streetwear, younger customers and online sales. There’s a “new luxury” wave within the newer generation that combines streetwear with luxury fashion that is ultimately a huge opportunity for Versace. Within the last 12 months, 39% of Versace’s website traffic came from people between the ages of 18-24.

Now the question arises on whether Michael Kors is the best person for the job with his own brand currently in the toilet. Capri Holdings’ plan of action for Versace is to raise accessories and footwear sales by opening more stores and embracing online shopping. In a sense, this is how Michael Kors’ own brand plummeted. Known for “affordable luxury”, MK bags are priced low and have a heavy presence in department stores and discount chains - a definite no no for the Versace brand. But, on the other end, Jimmy Choo has done surprisingly well since the acquisition.

While members of the Versace family are expected to maintain their roles in the company, this Capri Holdings acquisition means that one of the last independently owned Italian brands has gone corporate! Hopefully this will give Versace a nice shine and help Michael Kors rebrand his image all in one.