Gianni Versace Fashion House Being Purchased By Michael Kors
Is Michael Kors buying up?
CNBC.com reports that the Gianni Versace fashion house will soon be owned by Kors, whom many call the handbag maker, once he hands over $2.1 billion. Not only will Kors now have the Versace name, but he will also have what comes along with it, a bridge into the European luxury market.
After deal closes, Michael Kors will change its name to Capri Holdings, inspired by an "iconic, glamorous and luxury destination" island, the company said. It will retain the Michael Kors brand name.
- The handbag maker is acquiring Gianni Versace for $2.1 billion, including debt, providing Kors an entry into the exclusive high-end European luxury market.
- As part of the deal, Donatella Versace, who has helped run the company since her brother Gianni was murdered in 1997, will stay on to oversee the brand.
- The global market for personal luxury goods was estimated to be worth $307 billion in 2017.
- Kors will plan to grow the revenue of Versace to $2 billion a year.
- Kors plans to increase the retail outlets of Versace from 200 to 300 stores.
- Purchase follows last year's $1.2 billion purchase of shoe brand Jimmy Choo for $1.2 billion.
- The company hopes to reduce its proportion of business in the Americas from 66 percent to 57 percent, while increasing its European business from 23 percent to 24 percent and Asian business from 11 percent to 19 percent.
So is he buying up? Some are saying that his purchase of Versace is not just to get into the luxury market of Europe, but just to have a bigger foothold in the luxury market no matter where it is. Luxury products still sell in a recession or take a less of a hit when the market turns sour. If you can afford Versace when the economy is good, you will most likely be able to afford it when the market is down.
"Where Michael Kors has traditionally sat has been hit harder than true luxury [in recessions], so diversifying across traditional luxury may give them some insulation," said Kathy Gersch, executive vice president of strategy and change at management firm Kotter. - CNBC.com
Are you a Kors fan? Or are you more a Versace?