As Capri Holdings Ltd. nears the sale of its Italian luxury brand, Versace, to Prada SpA, its shares have surged. The deal, valued at up to €1.5 billion (US$1.6 billion), marks a significant shift in the luxury landscape.
Before Monday’s trading session in New York, Capri’s stock rose by as much as 9.6%, while Prada’s shares climbed 4.1% in Hong Kong, highlighting the importance of the Chinese market.
This acquisition reverses the long-standing trend of Italian luxury brands being acquired by foreign conglomerates. By adding Versace to its portfolio, Prada strengthens its position against industry titans LVMH and Kering SA, creating a formidable Italian luxury powerhouse.
The integration of Prada’s understated minimalism with Versace’s bold maximalism is expected to generate strong brand synergy. UBS analysts suggest that the acquisition will expand Prada’s market reach while minimising brand overlap.
Strategically, the timing favours Prada, which has remained resilient despite a broader luxury market slowdown. The company’s success has been fuelled by the resurgence of Miu Miu, whereas Versace has faced difficulties, reporting a 15% year-on-year revenue decline in Q3, with operating losses widening from $14 million to $21 million.
For Capri, the sale aligns with its broader restructuring efforts following the failed $8.5 billion merger with Tapestry Inc. The deal’s collapse resulted in Capri’s debt being downgraded to below investment grade, making a Versace divestment increasingly likely.
Selling Versace for €1.5 billion represents a loss for Capri, which acquired the brand for $2.1 billion in 2018. Despite initial optimism, Versace’s projected sales are set to decline from $810 million this financial year to $800 million next year. However, Capri anticipates growth to $900 million by 2028 and eventually reaching $1.5 billion in the long term.
Despite the deal’s potential, Capri—also the owner of Michael Kors and Jimmy Choo—acknowledges that a turnaround will take time. The company has struggled with sluggish sales growth and recently issued revenue forecasts below analysts’ expectations.
