A few weeks ago it was announced that American fashion brand Michael Kors has snapped up famed label Versace for $2.1 billon, taking over one of the last independent Italian brands.
Kors has made most of his money in the mid-market, with a large presence in shopping malls. The brand has a strong focus on accessories ranging from bags to shoes and watches, which are coveted both in America and in Europe. Yet, in recent years the Kors label has been associated with bargain basement stores and knock-off sellers.
Versace, on the other hand, is on the opposite end of the department store. The brand is the epitome of Italian fashion: luxurious and stylish at a very high price point.
So what does this sale mean for both brands and why is it so significant?
For one, this sale marks the establishment of America’s first global luxury group. A group to be renamed Capri Holdings, after the Italian island. Kors has been trying to build up an ‘American luxury brand’ for some time, previously purchasing Jimmy Choo in 2017. Luxury groups normally reside in Europe, but why?
Luxury goods have always been rooted in the ateliers of Europe, where couture was born. America never had a culture of historic brands or haute couture.
Versace itself was founded by Gianni Versace in 1978. Until his murder in 1997, he ran the creative side of the business and was credited with creating the supermodel phenomenon of the 1980s and 90s, championing diversity and blending high fashion with pop culture.
After his death, his sister Donatella took over the brand, Donatella will still remain as Versace’s creative director after the sale. Donatella faced backlash after the sale of Versace and responded to fans on Instagram:
Some of the criticism stems from Versace, a brand historically aligned with Italian heritage, culture and craftsmanship, being purchased by an American company that has made its money in malls.
Michael Kors’ chief executive and chairman John Idol outlined his strategy for Versace, including an increase in accessories and footwear, and the opening of approximately 100 new stores around the world. Idol aims to grow Versace’s revenue to $2 billion in the long term. Michael Kors said Tuesday that following the deal, the company hopes to reduce its proportion of business in the Americas from 66 % to 57 % while increasing its European business from 23 % to 24 % and Asian business from 11 % to 19 %.
Fashion historian Bronwyn Cosgrave said that is Kor succeeds in his plans for Versace he could become known for revitalizing a legendary European brand, which no American designer has ever accomplished.