Michael Kors would buy the luxury fashion brand Versace – Quartz

Michael Kors does not hide his ambition to build a world luxury conglomerate in the manner of the great European powers. The company had already reached an agreement last year to acquire high-end shoe manufacturer Jimmy Choo, and by closing the recent press conference with investors, CEO John D. Idol said the company

This next acquisition would be in the works. According to several reports, the American fashion brand is negotiating to take control of Versace, an agreement that would value the Italian label at about $ 2 billion. No official statement was published and sources who spoke to Bloomberg said that a final agreement had not been reached. But we seem to be imminent; sources tell Reuters an announcement is coming this week. (We contacted Michael Kors and Versace directly and will update this story with any response.)

A combination of the two brands would allow Michael Kors to go further in luxury. Although it is in direct competition with the Michael Kors Collection brand and now Jimmy Choo, the brand itself is even better known for its handbags and simple and refined clothing, which cost a few hundred dollars. These products are much more financially and stylistically accessible than the baroque creations of Versace, which regularly cost thousands of dollars.

This is a different evolution from Coach, his American rival in what is called "affordable luxury". In recent years, Coach has expanded by buying shoe brand Stuart Weitzman and manufacturer Kate Spade handbags, both of which are on the cheaper side of luxury.

Despite the different approaches to expansion, the two companies worked to solve some of the same issues as they sought to surpass their unique reputation as the core agents on the US department store sales rack. In 2016, everyone reduced their presence (paywall) in the distressed channel of department stores and began to reduce the generalized discounts that eroded the seal of their brand. Both companies saw their sales fall for a while, but found that the sale of more expensive products at full price was successful for a more affluent clientele. More recently, they have made progress through acquisitions and have sought to increase sales in regions such as Europe and Asia that have a taste for luxury.

Michael Kors is acquiring his stake in Versace from Blackstone, the private equity firm that bought 20% of Versace in 2014 to help finance an expansion. The company then seemed to be growing, having resisted the fighting it had suffered after the murder of its founder, Gianni Versace, in 1997. Donatella Versace took up her position as artistic director and the Versace family remained attached to society.

But Blackstone would have found the performance of the brand disappointing and wanted an exit. "They gradually persuaded the family to look into a possible sale and present them to a series of buyers, including Michael Kors," Reuters told a source who wished to remain anonymous. With money and ambition, Michael Kors seems to have stepped up his efforts.