Prada Eyes Versace: A Potential Shift in the Luxury Fashion Landscape as Bidders Circle

In a potentially game-changing shift within the luxury fashion sector, reports indicate that Prada (PINK:PRDSY) is among bidders eyeing a possible acquisition of Versace, a prestigious fashion house currently on the market under the ownership of Capri Holdings (NYSE: CPRI).

This intel emerged from the Italian newspaper Il Sole 24 Ore, adding a captivating twist to the dynamics of the high-end apparel industry.

The backdrop for this potential acquisition is a recent decision by Tapestry (NYSE: TPR), the owner of Coach, to abandon its pursuit of an $8.5 billion merger with Capri, a move that would have created a formidable luxury goods conglomerate in the U.S. The failure to finalize this deal casts a shadow over Capri's brand portfolio, prompting executives to consider strategic alternatives, including the sale of iconic brands like Versace and Jimmy Choo. Barclays (NYSE:BCS) has been retained to explore these options, adding layers of intrigue to the unfolding narrative.

Prada is reportedly working with Citi, which has assisted the brand in the past with various projects, including a dual-listing endeavor that was ultimately shelved. While both Prada and Citi have opted for silence regarding these developments, industry observers are keenly watching the situation unfold. Notably, shares of Prada in Hong Kong dipped by 0.4% by the end of the last trading session, a minor fluctuation that could reflect market reactions to the burgeoning speculation.

Founded in 1978 by the late Gianni Versace and currently directed creatively by his sister Donatella, Versace is renowned for its lavish prints and the iconic Medusa emblem. In contrast, Prada, under the distinctive vision of Miuccia Prada, is known for its more cerebral and sophisticated aesthetic. Interestingly, despite a broader downturn in the luxury market, Prada has reported an impressive 18% increase in sales at constant currencies for the third quarter.

To put things into perspective, Versace contributed significantly to Capri’s revenue stream, accounting for approximately $1 billion out of a total group revenue of $5.2 billion for the fiscal year ending March 30, 2024. This marks a slight decline from the previous year’s total of $5.6 billion. Notably, Capri recently revealed a sharper-than-anticipated drop in quarterly revenue, attributed to operational missteps and an overall decline in luxury demand globally.