Oh, you fancy, huh? Michael Kors challenges Euro-fashion with $2.35B Versace acquisition

American fashion company Michael Kors announced plans to buy Versace for $2.35B, taking aim at Europe’s market-leading fashion conglomerates.

September 25, 2018

American fashion company Michael Kors agreed to buy Italian brand Versace for $2.35B, positioning the “affordable-chic” Michael Kors brand to compete with Europe’s biggest and bougiest luxury fashion brands.

Fashion giants are buying each up other like trendy handbags

Consolidation is in this season: Luxury Italian suit-maker Ermenegildo Zegna bought American menswear outfit Thom Browne last month, and Swiss luxury titan Richemont purchased luxury e-commerce platform Net-a-Porter in May for $3.3B.

In American fashion, Tapestry (formerly Coach) acquired footwear company Stuart Weitzman in 2015 for $574m and handbag-maker Kate Spade for $2.4B in 2017. 

American fashion is copying Europe’s style

High fashion has long been centered in Europe. Case in point: The world’s 3 biggest fashion conglomerates are Moet Hennessy Louis Vuitton  (France), Richemont (Switzerland), and Kering (France).

Now, Michael Kors wants to beat European high fashion at its own exclusive game, purchasing British luxury shoemaker Jimmy Choo last year for $1.2B and now Versace. 

But here’s the thing — Kors might be fancy, but it’s not Versace-fancy. Kors handbags sell for under $500, while Versace’s start at $1.5k. Not all investors are convinced the company can pull off the merger: Kors shares fell more than 9.5% yesterday after the deal was announced.

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