Michael Kors is now on the verge of billionaire status after his global fashion empire bought Italian luxury label, Versace. The deal will cost Kors $2.1 billion dollars and is yet another big move to establish the brand into the high-end international market of fashion. Kors made its first strive last year when he bought the Carrie Bradshaw esque-designer shoe label, Jimmy Choo.
The new vision for the American brand, headquartered in London, will take off once the deal closes and they can change their name to Capri Holdings. Company officials claimed Kors was inspired by “an iconic, glamorous and luxury destination” island.
However, the brand will still retain the Michael Kors name for most of its shops and handbag outlets. Also under the deal, Donatella Versace who has helped run the brand since her brother Gianni was murdered in 1997, will continue to oversee Versace.
Already in 2017, Michael Kors was estimated to be worth 307 billion dollars in the global market for personal luxury goods. Yet the company still has plans to increase their revenue from roughly 200 to 300 stores and to expand their accessories department to 60 percent of revenue. Now that they have Versace under their belt, the company plans to expand the Italian label that way their global revenue will increase to 2 billion.
Kors is ultimately striving to get his brand out of the “middle market” of prominent fashion houses. The company’s products can usually be found in outlets, malls, and department stores, but heavy mall has declined in recent years in the US. A lot of the big traffic is coming from shoppers who are willing to pay the high price for luxury brands and extreme styles.
Their strategy has been to convince the big spenders to cater towards their label for bigger profit this year. Buying Versace fits well under their plan since it is an iconic label known for their over the top pricey gowns and lavish accessories.
“There are very few people you meet and say, ‘I have to work with this person and be a part of their life.’ I had that immediately with Donatella Versace,” said John Idol, the chief executive and chairman of Michael Kors.
“We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth.”
Versace was an important deal to snag since the company has proven how profitable it is and has a great reputation based on its founding family. Now, Kors plans on developing stores and their fashion market all across Europe and other nations across the globe for a diversity in sales.
Although the end to the independence and individuality of one of the last standing luxury European fashion houses has come, Versace will stay to have a creative say in the production. It is yet another shift to construct a bigger empire and fit the high-end consumer demand.