Prada brings Versace home to create Italian luxury contender
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Prada’s deal to buy Versace revives hopes for a ‘made in Italy’ luxury champion after many other family-founded brands ended up in French, Swiss or US hands, and comes as many Italian groups are outperforming the struggling sector.
The US$1.375 billion deal brings one of fashion’s best-known Italian labels back under Italian control after it was sold to US-listed Capri Holdings, then known as Michael Kors, for $2.15 billion including debt in 2018.
Despite Italy accounting for 50 per cent to 55 per cent of global personal luxury goods production, according to consultancy Bain’s estimates, the country lacks a group with a scale that matches up to French players such as LVMH and Gucci-owner Kering.
Milan-based Prada, controlled by designer Miuccia Prada and husband Patrizio Bertelli and listed in Hong Kong with a market capitalisation of about $15 billion, is the largest Italian luxury fashion group by revenue.
But the group, which also includes the fast-growing Miu Miu label, has been a relative minnow in terms of stock market valuation compared with the likes of Louis Vuitton-owner LVMH.
The Versace deal comes after Andrea Guerra became Prada’s CEO in 2023 to bridge a change in generation, with Lorenzo Bertelli, the son of the company’s main owners and its chief marketing officer, regarded as the heir apparent.
“Prada’s ambition to become a leading Italian luxury conglomerate is a significant move in a market that is dominated by French groups. It’s exactly what many Italians have been hoping for”, said Achim Berg, a fashion and luxury industry adviser.
The combined revenue of the five biggest Italian-owned listed luxury groups – Prada, Moncler, Ermenegildo Zegna, Brunello Cucinelli and Ferragamo is still well below Kering’s roughly $19 billion, even after a big fall in sales at the French group last year.
Company founder Brunello Cucinelli summed up the difference in approach on the two sides of the Alps in typically colourful fashion.
“Our esteemed French counterparts are great financiers,” he told the Milano Fashion Global Summit 2024 last October.
“But we Italians regard our ‘tiny big’ companies as if they were our little children, so we want to look after them and hand them down to a next generation,” he added.
“Our esteemed French counterparts are great financiers,”
While LVMH and Kering have swallowed many Italian brands, even the larger Italian groups have until now been comparatively reluctant to make big acquisitions.
“This acquisition represents Prada’s serious attempt to build a group – and a much more ambitious one compared to their past ventures with Helmut Lang and Jil Sander,” Berg said.
Prada’s chairman and co-owner Patrizio Bertelli defined the acquisition of those two brands – which were bought at the turn of the century and sold a few years later – as “strategic mistakes”. The group has since focused mainly on organic growth, with the exception of acquisitions of suppliers.
Both Prada and Versace have their roots in Milan and still have headquarters there, just four kilometres (2.5 miles) apart.
Milan-based Moncler, the mountain gear brand that was bought and revived by Italian entrepreneur and current main shareholder Remo Ruffini in 2003, has also shown some interest in dealmaking, buying Italian streetwear brand Stone Island in a $1.3-billion deal agreed in late 2020.
Moncler’s net cash position of $1.5 billion has fuelled analyst talk of more deals, but the group has denied such speculation.
Jil Sander is now part of Italian entrepreneur Renzo Rosso’s OTB Group, which also includes brands such as Diesel and Maison Margiela. But with annual sales of $1.9 billion, it remains relatively small.
The big Paris-based groups, meanwhile, have continued to make forays into Italy, underscoring the challenge an enlarged Prada would face to compete with them.
In the latest deals, Kering bought a 30 per cent stake in Italian maison Valentino in 2023, and LVMH last year helped to take Tod’s private and took a 10 per cent stake in Moncler’s top shareholder.
In the longer-term, eyes are on companies such as Milan-based Armani and Dolce & Gabbana, among the few in Italy that are still fully family-owned and unlisted.
Their ultimate fates could be decisive in any effort to create a true Italian powerhouse in global fashion.
Questions & Answers
Q.What is Prada's primary motivation for acquiring Versace, according to the article?
What is Prada's primary motivation for acquiring Versace, according to the article?
Prada aims to become a leading Italian luxury conglomerate, challenging the dominance of French groups. This acquisition is seen as a significant step towards creating a 'made in Italy' champion in the struggling luxury sector.
Q.How does the article describe Versace's previous ownership before this deal with Prada?
How does the article describe Versace's previous ownership before this deal with Prada?
Versace was previously sold to US-listed Capri Holdings, then known as Michael Kors, for $2.15 billion including debt in 2018. This deal brings the label back under Italian control.
Q.What is the perceived difference in business approach between Italian and French luxury groups, as highlighted by Brunello Cucinelli?
What is the perceived difference in business approach between Italian and French luxury groups, as highlighted by Brunello Cucinelli?
Brunello Cucinelli stated that French counterparts are great financiers. However, Italians regard their 'tiny big' companies like children, wanting to nurture and pass them down to the next generation.
Q.What is Prada's market capitalisation and how does it compare to major French luxury groups?
What is Prada's market capitalisation and how does it compare to major French luxury groups?
Prada has a market capitalisation of about $15 billion. The article states it has been a 'relative minnow' in stock market valuation compared to major French players like Louis Vuitton-owner LVMH.
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