Will Capri’s rumored sale of Versace and Jimmy Choo save Michael Kors? (#1687388)

Timing is everything, especially in business. In recent years, the current U.S. administration has become known for its more aggressive stance on antitrust laws; The Federal Trade Commission (FTC) and the Department of Justice’s Antitrust Division (DOJ) are implementing new guidelines and rules regarding mergers.

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Some believe the Trump administration will be more lenient in this regard. In the fashion world, the Saks-Neiman Marcus merger was the subject of intense scrutiny, but the deal appears to have escaped a blockade by the FTC and Justice Department.

But the bid by Tapestry, which owns Coach, Stuart Weitzman and Kate Spade, to buy Capri Holdings Ltd. michael kors Versace and Jimmy Choo were blocked and their contracts were broken. And so the year ends with Capri planning its next move, which will likely include selling Versace and Jimmy Choo.

The ultimate goal is to revive the group’s core Michael Kors brand. At its peak in 2016, the brand’s sales were $4.71 billion, stable at around $4.5 billion for the following three years, and like many companies, the pandemic has caused a slump in fiscal 2021. suffered a loss.

The brand is currently valued at $3.52 billion and has acquired luxury footwear brand Jimmy Choo, acquired Versace, and created Capri Holdings Limited, led by chairman and CEO John Idle. This is a 22% decrease compared to 2019, when the company was established.

Capri’s stock price fell 46% after the $8.5 billion deal was scrapped in October.

Interestingly, Versace was once valued at $1 billion before going public in 1997 (the deal never materialized due to the untimely murder of Gianni Versace by Andrew Cunanan in Miami Beach that same year). ), and was valued at just $137 million in 2019. When acquired by Isle of Capri for $2.1 billion.

Sales soared to $843 million the following year, albeit with a dip due to the pandemic, reaching $1 billion in 2022, peaking at $1.1 billion in 2023, and reaching 10 in 2024. It reached $30 million.

Versace has experienced ups and downs since Gianni’s death, with his sister Donatella, who continued as artistic director shortly after Gianni’s death, struggling with addiction, and his younger brother Santo (current president and co-CEO) a family member who overcame difficulties. I have drama. Sentenced to prison after being found to have bribed officials to obtain favorable tax audits.

Still, the brand received critical acclaim, including the now-iconic green Versace dress worn by JLo at the Grammy Awards and at the 2017 ’90s Supermodel Reunion Slash Tribute Show.

Recently, celebrities such as Ariana Grande, Taylor Swift, and Nicole Kidman have worn this design at red carpet events. Gen Z’s interest in Barocco-print shirts is on the rise again, with original shirts fetching four-figure prices on resale sites. This is the Brand Magic Index for October 2023 to March 2024, created by Business of Fashion and Quilt AI, where Versace somehow finished in third place behind Dior and Louis Vuitton. That might explain why.

Additionally, Versace has multiple categories that generate revenue, including healthy licensing deals such as fragrances, eyewear, children’s wear, home goods, housing, and hotels.

This is similar to Kors’ acquisition of Jimmy Choo in 2017, when it bought the British Italian shoe company for $1.2 billion. Sales in 2018 were $222.6 million, and average sales since 2019 are approximately $600 million.

Partnering with former Vogue reporter Tamara Mellon London handmade shoe manufacturer Jimmy Choo Yeang Keat has launched a line of luxury footwear that will be distributed and produced globally from its bespoke business. Mellon then acquired him in 2001. Mellon then sold Jimmy Choo in 2011 to JAB Holdings-owned LaVex, from which Kors acquired Jimmy Choo.

Jimmy Choo became a star brand in 1996 when it was made popular by Princess Diana, and later became famous for “Sex and the City” and “The Devil Wears Prada.” Stilettos also contributed to its popularity, but its popularity has waned in recent years.

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First, the athleisure movement that began around 2015 allowed trainers to be worn with business attire, along with Gen Z’s penchant for thick lug sole styles, the resurgence of the Nike Air Force 1 shoe, and the rise of ballet flats, loafers, and Mary Janes. is adopted on a daily basis. Even when it comes to getting dressed at night, wearing sky-high, sexy shoes is almost outdated. A recent campaign starring Winona Ryder seems to be gaining traction in the field of relativity.

Capri Group began closing stores as sales fell 70% due to the pandemic, but Versace now has 230 boutiques and 638 licensed stores worldwide, and Chew has 43 stores in the US and EMEA region. It has 68 stores and 123 stores in Asia.

The largest retailer is the Michael Kors brand. 320 stores in Asia, 293 stores in the Americas, and 156 stores in the EMEA region.

Will Versace and Jimmy Choo’s exits make a difference for Kors? At least if they can recoup their initial investment. However, it is very important to review Kors’ brand portfolio. The key is to review the performance of these multiple retailers. The brand just repositioned its Madison Avenue store into a consolidated single-lever space, focusing on the VIC experience and bringing it closer to its 57 foot traffic.th it may already be heading in that direction.

The company, as the merchandising of both the Michael Kors Collection and its likely breadwinner, the Michael Kors line, may have led to customer confusion and perhaps undermined the luxury status of the collection’s products. may need to outline their product.

It may also want to consider expanding its branding beyond women’s and men’s wear and accessories, exploring other categories and partnerships, as many of its contemporary designer brands have done. The company has probably learned a lot about that from Versace over the past five years, and it’s a good fit for the brand since the man Michael Kors and the brand are synonymous with the jet set.

Retail consultant Robert Burke observes that all three brands have different business models. “For Capri, the focus is on Kors. Versace and Jimmy Choo are interesting and attractive brands, and Capri will benefit from selling them and funneling cash into Michael Kors,” he told FashionNetwork com.

Burke does not consider a sale where one company buys both. “They should be sold separately. Jimmy Choo is a good brand. It’s not broken and doesn’t need overhauling. Jimmy Choo has historically been the leader in independent designer shoes. Today, designer brands “This category is more unique because we are strengthening our offering,” he said. “Versace may need to update a bit from street style trends. We want to step back from that and instead see products that are less logo-driven, more understated, and more quality over flashiness come to market.” “It should, but retains its rock’n’roll elegance. ”

Retail has changed since Kors reached its peak of profitability eight years ago.

“I think the Michael Kors brand is feeling the strain of department stores being very different now than it was in 2016. The promotional attitude and tempo of these stores must have had an impact on the brand.”

Uncertainty in the retail industry, the pandemic, brand boundaries and a deal with three unique brands may have thwarted Capri Holdings’ plans to build a luxury group. Still, the Michael Kors brand has revenue of $3.52 billion, so it’s not game over.