Italy’s Prada is among potential suitors considering fashion group Versace, which is being put up for sale by parent company Capri Holdings, and is said to be working with City to consider a bid. A person familiar with the matter said this on Friday.
US Capri is struggling with declining sales in the world’s $400 billion luxury goods sector, ending a long industry boom as confidence erodes as wealthy Chinese cut back on spending.
In November, Coach owner Tapestry abandoned an $8.5 billion deal to buy Michael Kors owner Capri.
Capri executives did not rule out selling their brand after a deal to form a US luxury conglomerate fell through.
Capri hired Barclays to explore strategic options, including selling its Versace and Jimmy Choo brands, two people with direct knowledge of the matter told reporters.
One person said the entire Capri Holdings group could also be put up for sale.
Italy’s Il Sole 24 Ore first reported that Prada is considering a possible bid with City. The US bank has worked with Italian luxury brands on dual-listing projects in the past, but the deal was put on hold.
“On the positive side, you could argue that Versace and Prada cater to completely different consumer groups,” said Bernstein analyst Luca Sorca, noting that the former is known for its maximalist aesthetic. He added that while the latter is known for its minimalism.
Founded in Milan in 1978 by the late Italian designer Gianni Versace and still led by his sister Donatella as creative director, Versace is known for its bold, luxurious prints, including the iconic Medusa motif. Now you can
Prada, whose rigorous, intelligent style bears the imprint of creative chief Miuccia Prada, continues to defy the industry’s downturn, with sales up 18% in constant currency in the third quarter.
“On the downside, Prada has a terrible history with mergers and acquisitions,” Solka said, citing Jil Sander and Helmut Lang as examples. Prada acquired the two labels in the late 1990s and sold them a few years later, with Prada’s owner labeling them “mistakes”.
The analyst said another challenge Prada needs to address is reorganizing its distribution by reducing its wholesale presence and retail outlets, as well as updating Versace’s aesthetic.
U.S.-listed Capri shares rose about 5% in premarket trading. Prada’s Hong Kong-listed shares closed 0.4% lower on Friday.
In the fiscal year ending March 30, 2024, Versace accounted for one-fifth of Capri’s sales. Versace’s sales fell to $1.03 billion from $1.1 billion a year earlier, and its operating margin fell to 2.4% from 13.7%.
“We believe that the acquisition of Versace would be a difficult turnaround. We therefore believe that it is unlikely that Prada will have any real interest in Versace until further factors are determined,” the Italian brokerage said. It is doubtful whether the bid will materialize, said Equita analysts.
Prada CEO Andrea Guerra said in May that the group was not considering major acquisitions as it focused on the brands it already owned.
(Reuters)
