Mixed analysis on potential upside may win over the merge of fashion intrigue
U.S. Capri has been struggling with falling sales of their Versace brand, in a global $400 billion luxury sector where confidence has been eroded by wealthy Chinese cutting their spending in recent years. Reports are that Italy’s Prada is among the potential suitors looking at fashion group Versace, put up for sale by parent Capri Holdings, and has been working with Citi to evaluate any bid.
Italy’s Il Sole 24 Ore first reported that Prada was evaluating a possible bid with Citi. The U.S. bank has worked with the Italian luxury group in the past over a dual-listing project which was put on hold.
Versace, founded in Milan in 1978 by late Italian designer Gianni Versace and still led by his sister Donatella as creative director, became known for its bold, opulent prints, including the iconic Medusa motif.
Prada, whose rigorous, intellectual style bears the imprint of creative head Miuccia Prada, has been defying the industry’s downturn with sales up 18% at constant currencies in the third quarter.
Versace accounted for a fifth of Capri’s revenue in the fiscal year through March 30, 2024. Versace’s revenues dropped to $1.03 billion from $1.1 billion one year earlier, with the operating margin declining to 2.4% from 13.7%.