The acquisition comes after Prada recorded sales growth in the last nine months of 2024, while Versace’s revenue has been decreasing in recent quarters.
To thrive in today’s luxury fashion industry, brands need to grow beyond opening more stores, launching collaborations, or introducing show-stopping collections. Merging with other labels has become the new norm, most recently when Prada announced its acquisition of smaller rival Versace from Capri Holdings.
Prada, on Thursday, broke the news that it struck a deal worth $1.38 billion, including debt, to acquire Versace. The move merges two of the most reputable names in Italian fashion and offers to increase the revenues of both brands in the coming years.
“With its highly recognizable aesthetic, Versace constitutes a strongly complementary addition to the Prada Group’s portfolio and displays significant untapped growth potential leveraging multiple value creation levers,” Prada wrote in a release.
“Within the Prada Group, Versace will maintain its creative DNA and cultural authenticity, while benefitting from the full strength of the Group’s consolidated platform, including industrial capabilities, retail execution, and operational expertise,” the Milan-based retailer added.
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Prada’s acquisition of Versace happens in the middle of the global luxury slowdown, which began in 2023, and comes right after the fashion powerhouse reported strong organic sales growth in the last nine months of 2024.
It could rebuild the future of Versace, which, on the other hand, has been operating at a loss in recent quarters. According to a report published by Capri in February, Versace’s revenue of $193 million decreased by 15% in the third quarter of fiscal 2025 compared to the prior year. It expects to earn $810 million in total revenue by the end of 2025.
Capri, which also owns Michael Kors and Jimmy Choo, reported that its total revenue fell to $1.26 billion in the same quarter, or 11.6% lower compared to the previous year. It has, in fact, tried to sell its business for years and Coach parent company, Tapestry, had planned to acquire it for $8.5 billion in 2023. However, the acquisition was blocked by Federal Trade Commission as it would “substantially lessen competition” among luxury bag makers. The deal was subsequently terminated.
Most recently, Capri’s value fell to as low as $1.5 billion following U.S. President Donald Trump’s declaration of tariffs on imports from 57 countries around the globe. On April 2, Trump signed an executive order imposing a minimum 10% tariff on all US imports starting April 5, and a rate of up to 50% on imports from the 57 other countries beginning April 9.
At that time, Prada negotiated to acquire Versace down from $1.6 billion to $1.38 billion, people with direct knowledge told The Financial Times. The amount is a big discount to the $2.15 billion Capri paid to buy Versace from the Versace family and Blackstone in 2018. Meanwhile, another source told
Reuters that both Prada and Capri were willing to “swallow a bunch of geopolitical risks” to get the deal done.
It is expected to close in the second half of 2025, with Prada committing $1.7 billion of new debt to fund the deal. Versace now joins other designer labels under the Prada Group, including Miu Miu and footwear brand Church.
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