PRADA (01913) has finalized the acquisition of Versace from Capri Holdings (CPRI.US) for $1.25 billion. Capri originally purchased the Versace brand in 2018 for $2 billion but opted to divest it amid post-pandemic challenges. In fiscal 2025, Versace's revenue declined by 15% to $193 million, as its business clashed with the "quiet luxury" trend. Meanwhile, PRADA achieved 17% revenue growth last year (reaching €5.4 billion), driven by its Miu Miu segment. The company expects Versace to contribute 13% to its pro-forma revenue while unlocking untapped growth potential through Italian supply chain integration.

PRADA’s marketing director and heir, Lorenzo Bertelli, will assume the role of executive chairman at Versace. The new creative director, Dario Vitale (formerly of Miu Mui), will lead the design team, following the departure of Versace’s former CEO, Donatella Versace.

For Capri, the sale comes at a critical juncture as it faces financial strain and strategic restructuring. The company has struggled with declining revenue, shrinking margins, and mounting debt. The $1.375 billion in proceeds will primarily be used to repay debt, significantly improving its financial position. Post-transaction, Capri’s leverage ratio will drop substantially, easing financial burdens and borrowing costs.

Capri CEO John Idol stated that the sale strengthens the company’s balance sheet, reduces leverage, and enhances financial flexibility for future investments and shareholder returns. Divesting Versace allows Capri to cut losses and refocus resources on its core brands, Michael Kors and Jimmy Choo. Michael Kors, the group’s largest brand, has seen ten consecutive quarters of revenue decline, necessitating major investment and transformation.

The sale follows the blocked merger between Capri and Tapestry (parent company of Coach) in late 2024, after the U.S. FTC cited antitrust concerns. With the deal’s collapse, Capri must demonstrate independent viability. The Versace divestiture marks a key step in its restructuring plan, signaling a clear strategic direction.

Idol emphasized, "We remain committed to advancing our strategic plans for Michael Kors and Jimmy Choo to unlock their full potential. Looking ahead, we believe our business will stabilize this year, laying a solid foundation for renewed growth in fiscal 2027."