Following news that the business is nearing a 1.5 billion euro sale of its Versace brand to Italian fashion company Prada SpA, Capri Holdings Ltd.’s stock shot up 7.8% early Monday.
According to Bloomberg, which cited persons familiar with the situation, the Italian family-owned Prada (PRDSY) has accepted that amount. In 1878, the late Gianni Versace created Versace, which is now managed by his sister Donatella.
Due to the low demand for Michael Kors bags and accessories, Capri (CPRI), the company that owns the Michael Kors and Jimmy Choo brands, has been having trouble increasing sales. The business forecasted a deficit for the upcoming fiscal year in February, with a recovery to follow.
In November, a federal judge banned a planned $8.5 billion merger by Tapestry Inc. (TPR), the parent company of Coach and Kate Spade, on the grounds that it would harm competition in the luxury handbag market.
Last month, Tapestry announced that it will pay $105 million in cash to Caleres Inc. (CAL) for the sale of a third brand, Stuart Weitzman.
Mario Prada established the Milan-based Prada in 1913, and his granddaughter Miuccia Prada currently serves as its manager. According to Bloomberg, the business has finished its preliminary due diligence on Versace and has been given access to its financial and sales data.
Versace has suffered in recent years after being purchased by Michael Kors for $2.1 billion in 2018.
Versace reported $193 million in revenue for the last quarter of 2024, a 15% decrease from the same period the previous year. According to Chief Executive John Idol, the corporation made several mistakes in its attempt to reposition the brands, increasing pricing by lowering lower-priced items and diminishing statement items.
According to a Wall Street Journal story last month, the company’s attempt to highlight more upscale items and the skill required to create them backfired as customers avoided the store.
According to Idol, the Versace brand is still popular with consumers, and the company’s fragrance and eyewear divisions are also doing well.
However, due to significant leverage and performance demands, S&P Global Ratings downgraded Capri’s credit to junk status in February, moving it from BBB-minus to BB.
Over the past 12 months, the stock has down 52%, while the S&P 500 SPX has increased 15.9%.
