BOF
Prada’s Versace Acquisition Closes, Now the Real Work Begins
The group’s effort to revive the fortunes of the iconic label founded by Gianni Versace will require both patience and pain. ‘The next 12 months will be rough.’
02 December 2025
Key insights
- The acquisition hands Prada one of Italy’s most recognisable and troubled luxury brands, setting up a long, uncertain turnaround effort
- Versace, which struggled for seven years under Capri, must reduce outlet dependence to reclaim premium positioning, a move likely to hurt short-term sales and margins, analysts say.
- New creative director Dario Vitale’s debut was well-received, but translating runway buzz into commercial momentum remains uncertain and Prada’s unsuccessful past acquisitions cast a long shadow.
MILAN — Prada Group on Tuesday officially took control of Versace, which, despite its global recognition, powerful place in pop culture and clear aesthetic signature, has never had business success to match the strength of its brand.
With the
€1.25 billion ($1.44 billion) acquisition, which cleared final regulatory hurdles, Prada adds one of Italy’s most glamorous but troubled fashion houses to its portfolio: Versace has been listless under Capri Holdings, which paid €1.83 billion for the house in 2018.
Like most of its peers, Versace has suffered through the recent downturn in luxury demand, with revenue dropping by a quarter in the last two years. But Versace’s woes run deeper, with its most-recent annual revenue below that of the fiscal year that ended in March 2020, the first full year under Capri ownership.
While many Italian fashion houses have remained profitable during the sector-wide downturn — driven by a global macroeconomic slowdown and geopolitical instability, as well as a value proposition weakened by rampant price hikes without corresponding product innovation — Versace posted an operating loss in its last fiscal year.
Andrea Guerra, Prada’s chief executive, has said investors shouldn’t expect any quick miracles because “the journey will be long and will require disciplined execution and patience.”
Lorenzo Bertelli, the scion of the Prada-Bertelli family who will become
executive chairman of Versace, has said Prada found Versace appealing because its aesthetic complements that of the group’s existing brands and “Versace’s brand awareness is among the top five or six worldwide.”
“It was the right time to seize a growth opportunity for the group,” Bertelli said.
At BoF’s VOICES conference last month, Guerra also spoke of Versace being a complement to the Prada brand, but also outlined what links the two labels.
Versace “has some very similar things to us,” Guerra said. “It’s a brand that was born in culture. It’s a brand that was born in classic, historic, Greek, Mediterranean, ancient roots. And on the other side, let’s not forget that Versace has created what we’re seeing every day, this glam, this pop, music, models, supermodels.”
Many in Italy’s fashion industry have lauded Prada’s move, almost willing it to be the first salvo in what could someday become the country’s long-awaited challenger to France’s LVMH and Kering groups.
But Prada management has indicated that while Versace isn’t necessarily a one-off, it was something of a perfect fit and came at an attractive price.
Guerra has promised to preserve Versace’s “DNA” while righting the wobbling ship by leveraging Prada’s more efficient supply chain, retail network and global reach. In recent years, Prada has worked on professionalising its operations, including through streamlining and improved governance, and the acquisition will be a test of its platform.
But Prada has a formidable task, not only in onboarding Versace to its platform, but also restoring the brand’s sheen.
“
They should reestablish Versace as a premium brand, rather than one dependent on outlet malls, which was always the risk of being run by Capri,” said HSBC analyst Erwan Rambourg. “
But getting out of outlets isn’t going to be good initially for sales or margins. The next 12 months will be rough.”
But Prada has in its favour that the Prada-Bertelli family still owns 80 percent of the company and has the patience to wait for its elixir to work so Versace can reestablish its “very strong voice,” Rambourg said.
In recent years, that voice had become stale, something Versace’s new creative director, Dario Vitale, sought to address at his debut during Milan’s last fashion week. The show — the first in the company’s 47-year history not designed by founder Gianni Versace or his sister Donatella — exceeded expectations, but it will take time to see if Vitale can translate runway energy into higher sales and profit.
Vitale brings 15 years of experience at Prada sister brand Miu Miu (he was design and image director when he quit to join Versace).
Prada management hasn’t explicitly stated whether he will stay on now that the acquisition has closed, though Guerra said at VOICES that Prada management would take some time to evaluate the situation at Versace before making any significant moves.
“Especially at the beginning, stability is a very important word,” Guerra said.
“And this is what we are going to do. We are going to care about everyone working in Versace. And we are going to care about everything that is happening in Versace. The only thing I don’t want to happen is I don’t want to kill the patient while we cure it.”
It is also unclear whether Donatella Versace might seek to renegotiate her role as brand ambassador, which she took on after handing over the creative reins to Vitale earlier this year.
She skipped the Milan show without providing an explanation. No top officials from Prada attended either.
Versace didn’t respond to a request for comment and didn’t make Donatella Versace available. Prada declined to comment.
Donatella Versace did appear earlier last month at the Council of Fashion Designers of America awards ceremony in New York where Amber Valletta wore the Versace jungle print dress, which she debuted in 1999 and then Jennifer Lopez famously sported in 2000 to much fanfare.
But despite the power of Versace’s brand, some analysts expect a turnaround to prove challenging no matter how patient Prada is, citing the group’s history of failed acquisitions.
The company bought Jill Sander, Helmut Lang and Church’s at the turn of the century with the first two later sold at a loss. Church’s, while still part of the Prada Group, “is today flirting with utter irrelevance,” Bernstein analyst Luca Solca wrote in a recent report.
He called Prada’s acquisitions record “abysmal” and said the wider industry has had “haphazard success with past glory brand revivals.”
“Reviving Versace won’t be easy because it has been going downhill for more than 20 years and deals in the luxury sector are always difficult,” said Elsa Berry, co-founder and managing director of Vendôme Global Partners, a New York-based strategic mergers and acquisitions advisory.
“But Prada management has made positive corrections to their business model in recent years and it now includes new leaders who seem to have what it takes as long as they are patient and build on Versace’s distinctive brand DNA.”
