Prada Acquires Versace for €1.25 Billion, Aims for Growth

Prada Group has officially acquired rival fashion house Versace in a deal valued at €1.25 billion (nearly $1.4 billion). This acquisition marks a significant shift in the luxury fashion landscape, as Prada aims to revitalize Versace, a brand known for its bold designs but struggling with post-pandemic performance. The announcement was made on March 5, 2024, following the completion of all necessary regulatory approvals.

In a statement, Prada emphasized that the 47-year-old Versace brand possesses “significant untapped growth potential.” The acquisition places Versace alongside Prada’s distinct “ugly chic” aesthetic and Miu Miu’s youthful appeal, creating a diversified portfolio within the luxury sector.

Lorenzo Bertelli, heir to the Prada legacy and currently serving as the group’s marketing director and sustainability chief, will take on the role of executive chairman at Versace. While he has indicated that no immediate executive changes are planned, he acknowledged that Versace has historically underperformed in the competitive market.

Versace has been undergoing a creative renaissance under the direction of new designer Dario Vitale, who showcased his inaugural collection at Milan Fashion Week in September 2023. Prior to joining Versace, Vitale was the head of design at Miu Miu. Notably, his recruitment was independent of the Prada deal, according to company executives.

The acquisition comes after Capri Holdings, which also owns Michael Kors and Jimmy Choo, purchased Versace for $2 billion in 2018. Capri has faced challenges in positioning Versace amid a trend favoring “quiet luxury.” Currently, Versace accounts for 20% of Capri Holdings’ projected €5.2 billion revenue for 2024.

Prada Group’s projections suggest that Versace will represent approximately 13% of its pro-forma revenues, with Miu Miu contributing 22% and Prada itself accounting for 64%. This strategic acquisition reflects Prada’s robust financial performance, as the group reported a 17% revenue increase to €5.4 billion last year.

Integration and Future Prospects

As part of its strategy, Prada Group has begun integrating Versace into its Italian manufacturing framework, which is a point of pride for the organization. Bertelli stated, “Making a bag for one brand or another, the know-how is the same.” The Scandicci leather goods factory, which already produces for Prada and Miu Miu, will soon welcome Versace into its production line.

Prada’s commitment to enhancing its supply chain is evident, having invested €60 million this year alone. This investment includes the establishment of a new leather goods factory near Siena, and a knitwear facility near Perugia. Additionally, the group is increasing production at its Church’s footwear factory in Britain and expanding another factory in Tuscany. These efforts build on a substantial investment of €200 million made between 2019 and 2024.

The Prada Group has also prioritized artisan training, operating an in-house academy that has trained over 570 new artisans in the past 25 years across various Italian regions. In 2023, the academy saw a 28% increase in trainees, with 70% of the 120 artisans trained recently being hired by the group.

Through this acquisition and strategic investments, Prada Group is positioning itself for growth, with the aim of revitalizing Versace and enhancing its overall market presence.