In an attempt to become America’s first luxury conglomerate, Michael Kors Holdings, now renamed Capri Holdings, has acquired the Italian fashion house Versace for a value of approximately $2.12 billion (two-and-a-half times the brand’s current revenue). The deal is expected to close in the fourth quarter of 2019.

In a presentation released to investors, Capri Holdings outlined its plans for the future of Versace, which include expanding its retail presence from 200 to 300 stores worldwide, making e-commerce a bigger factor and expanding men’s and women’s accessories and footwear (the categories currently account for 35 percent of the business, Capri Holdings would like to increase that to 60 percent.)

While the addition is a game-changer for both parties, the names at the top will remain the same; chairman and chief of Capri Holdings and chief executive of Michael Kors John D Idol, Versace chief executive Jonathan Akeroyd and—perhaps most importantly—Versace creative director Donatella Versace will all continue on in their roles.

“This is a very exciting moment for Versace,” she said in a statement, as reported on by Business of Fashion, adding that her brother Santo and daughter Allegra's stake in Capri "demonstrates our belief in the long-term success of Versace and commitment to this new global fashion luxury group."

“I am proud that Versace remains very strong in both fashion and modern culture. Versace is not only synonymous with its iconic and unmistakable style, but with being inclusive and embracing of diversity, as well as empowering people to express themselves," she explained. "Santo, Allegra and I recognize that this next step will allow Versace to reach its full potential."

In acquiring Versace, as well as Jimmy Choo in July 2017, Capri Holdings hopes to not only build a portfolio that can compete with the rising American and well-established European conglomerates, it also hopes to offset the declining sales of its former namesake, Michael Kors as the brand is closing retail outlets and shifting its brand perception while trying to reduce its reliance on department stores.

Perhaps this push to pump up the brand at the center of the group is exactly why Capri Holdings was willing to pay a high ticket price for Versace. While Versace has a world-famous name and is still respected in pop culture (shout out to Migos), the business hasn’t necessarily reflected that presence in recent years. The brand ran losses from the late 1990s to 2011, with the Versace family selling a 20 percent stake to the Blackstone Group in 2014. As Business of Fashion notes, the trifecta of “Michael Kors, Jimmy Choo and Versace combined brought in less revenue last year than Gucci alone did for Kering.”

With a recent collaboration with Kith followed up by this acquisition, it’s clear that the storied Italian fashion house is looking to broaden its appeal and expand its brand across various sectors and the global marketplace at large. Do you think this is a good move for Versace? Let us know what you think in the comments and stay tuned to Dry Clean Only for more news on the biggest brands in fashion today.

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Tags: gucci, michael-kors, versace