Published: Tue, September 25, 2018
Markets | By Josh Butler

Will Michael Kors make Versace cheaper?

Will Michael Kors make Versace cheaper?

The legendary fashion house of Versace is about to be sold to a US company for $2 billion, according to Italy's biggest newspaper, Corierra della Sera.

Last year, the American group bought Jimmy Choo - whose stilettos were made famous by TV series Sex and the City - for $1.35bn.

The deal comes as budding luxury conglomerates, including Michael Kors' U.S. rival Tapestry, owner of Coach and Kate Spade, are trying to make inroads into an industry still dominated by major European players, including Louis Vuitton owner LVMH. The rest of the company is held by the Versace family.

Givi in turn is half-owned by Allegra Versace Beck, daughter of Donatella and niece of late founder Gianni.

A representative for Versace declined to comment on the potential transaction.

The deal with Michael Kors would come after the rumoured retreat of Kering, the French fashion giant which owns luxury brands like Gucci, Yves Saint Laurent and Alexander McQueen. The shares had recovered since then, trading 15 per cent higher for the year through the end of last week, with Choo boosting the latest quarterly results.

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The sale of Versace, which is known for its Medusa head logo, was sealed on Monday, three sources familiar with the talks confirmed to Reuters.

Again, Michael Kors is aiming to bolster its roster of luxury brands including those in the fashion, footwear, and accessories categories. Versace has been pushing for an initial public offering, or IPO, but they failed to reach the goal due to a fluctuating market.

Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show that previous year it posted sales of 668 million euros (US$786 million) and earnings before interest, tax, depreciation and appreciation (EBITDA) of 44.6 million euros.

The company posted revenue of 686 million euros in 2016 and returned to profitability in 2017.

Italian Fashion House Versace opens the Haute Couture Fashion Week. In a tribute to Gianni, Donatella Versace brought back the most iconic looks from his collections spanning the 1990s, including silk blouses mixing leopard prints with images of baroque architecture.

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