In September 2018, the fashion world was abuzz with the news that Michael Kors had acquired the iconic Italian luxury brand Versace for a whopping $2.12 billion. The announcement took many by surprise, and left industry insiders wondering – why did MK buy Versace?
The Background
Michael Kors, an American fashion brand, was founded in 1981 and is known for its affordable luxury items such as handbags, watches and clothing. The company went public in 2011 and has since expanded its portfolio by acquiring other brands such as Jimmy Choo in 2017.
Versace, on the other hand, was founded in 1978 by Gianni Versace and is known for its bold designs and use of vibrant colors. The brand has a loyal customer base among celebrities and high-end consumers.
The Reasons Behind the Acquisition
So why did Michael Kors decide to buy Versace? There are several reasons behind this acquisition:
Diversification of Portfolio
By acquiring Versace, Michael Kors aimed to diversify its product portfolio into high-end luxury goods. This move would help the company tap into a new customer base that is interested in designer fashion pieces.
Increased Brand Value
The acquisition of an iconic brand like Versace would not only add value to Michael Kors’ brand value but also boost its credibility in the luxury fashion industry.
Expansion into International Markets
Versace has a strong presence in international markets such as Europe and Asia which Michael Kors can leverage to expand its own global reach.
Synergy Between Brands
Both brands have a strong focus on design, innovation, and quality which makes them complementary to each other. The acquisition would help both brands share their expertise and resources to create new products.
The Future of Michael Kors and Versace
The acquisition of Versace by Michael Kors is expected to bring about significant changes for both brands. Michael Kors has already announced that it will change its name to Capri Holdings Ltd. to reflect the new portfolio of brands under its umbrella.
As for Versace, the brand is expected to remain largely unchanged with Donatella Versace continuing as the creative director. However, there are rumors that the brand may adopt a more commercial approach in its designs to appeal to a wider audience.
Conclusion
In conclusion, the acquisition of Versace by Michael Kors was a strategic move aimed at diversifying its product portfolio, expanding into international markets and increasing brand value. The future looks bright for both brands as they work together to create innovative fashion products that cater to a wider audience.