Bankers and would-be buyers are buzzing about what Versace and Jimmy Choo will do next and where they’ll land next year.
Capri Holdings, which owns both brands, is working with Barclays to find buyers for both businesses, financial sources told WWD.
Capri and Barclays did not respond to requests for comment on Friday.
This process is still in its infancy, and it is unclear whether the brands will be sold together, separately, or not at all. Data rooms are now being set up to store confidential information about the company for potential buyers. One source said Barclays had indicated it wanted to start receiving expressions of interest before Christmas.
A buyer could come in on short notice and close the deal, but it’s also possible that Barclays ends up running an auction process, with traders making offers over multiple rounds. Bidders typically first access a brand’s data to make an initial bid and then access an administrator to adjust their offer.
This sale process is not surprising.
Capri was widely seen as considering options for both brands after its $8.5 billion acquisition by Tapestry was halted following antitrust allegations from the government. Tapestry agreed to pay $57 per share for the company, but Capri’s stock lost value significantly, closing Friday at $21.36, down 1.2%.
Michael Kors is the company’s largest business and is in need of a turnaround. Selling other divisions would give Capri the time and resources to continue its efforts.
Capri has at least previously considered the idea of spinning off the division.
In late 2022, Capri’s board met with Barclays banking officials to “consider certain potential strategic alternatives.” The deal included the sale of the entire Capri company, initial public offerings of shares in Versace and Jimmy Choo, and the sale of two luxury brands.
At the time, bankers said there were only a “limited number” of potential buyers for Capri and that there would be “low strategic interest” in acquiring Versace and Jimmy Choo together.
Once negotiations began with Tapestry, Mr. Capri, along with chairman and chief executive John Idle, remained on the ground, meeting with potential suitors. One of them met with “the chairman and chief executive officer of a multi-industry holding company” to discuss the possibility of acquiring both Versace and Jimmy Choo, as well as investing in an IPO, according to regulatory documents. That’s what it means. The other, “the chairman and chief executive officer of an international luxury goods company,” wanted to return to “previous conversations” about acquiring both brands.
All of these options were removed when Capri advanced Tapestry.
New life may have been breathed into previous negotiations after that deal collapsed last month.
Idol revealed the fashion group’s plans during a conference call with analysts last month and was asked about exploring strategic alternatives to Versace and Jimmy Choo.
“We are a publicly traded company,” Idol said. “We have always been, and continue to be, open to dialogue with any company interested in our assets.
“Our first effort is to rebuild all three companies and put them on a growth trajectory, creating value for our shareholders through increased revenue, increased operating margins, and ultimately increased net income.” he said.
While Michael Kors is getting a lot of attention, Idol also charted the future path for Versace.
Both brands have work to do, having been hit by a slowdown in demand for luxury goods and an economic slowdown, particularly in China.
Each business had its own unique set of headwinds.
Versace is known for the kind of flashy luxury that may come back into fashion, but it didn’t fit into the quiet luxury trend. And sky-high stiletto-wearing Jimmy Choo is seeing business slump after the post-COVID-19 recovery.
Vivian Rohner in Jimmy Choo.
Jimmy Choo / Provided by Stas Komarovsky
Versace’s sales for the first half of the year were down 22.1% to $420 million, while Jimmy Choo’s sales held up just 0.6% to $313 million.
Idol calls Versace “one of the world’s most storied luxury brands with a 46-year heritage,” and says it has “attracted and revitalized both new and loyal consumers, expanded its product lineup, and expanded its store footprint.” “We have the potential to recover by improving productivity and getting our wholesale business back on track.” growth. “
“We believe that by removing too many of Versace’s unique statement items, we have diminished the appeal of the brand and products,” the CEO said. “We have also significantly reduced our product offerings for aspirational consumers to enhance our brand.”
Going forward, Versace plans to balance fun and elegance to satisfy aspiring luxury shoppers.
At Jimmy Choo, Idol said the company is expanding its casual products and will “respond more quickly to changing trends.” (Jimmy Choo could compete with Tapestry’s Stuart Weitzman brand, which sources say is still being snapped up).
At least that’s the direction Capri is taking with both brands. Whether it ultimately gets there may be up to its next owner.
Again, as Idol well knows, not all planned deals end up being completed.
