What’s Behind the Prada Group 1.25 Billion-euro Deal to Buy Versace
Prada's management sees untapped potential in Versace’s global brand recognition, aiming to evolve its bold aesthetic and leveraging the group’s platform.
By Luisa Zargani
April 10, 2025, 2:09pm
MILAN — Versace has “huge potential” and global brand awareness, according to Lorenzo Bertelli, head of CSR at Prada Group.
During a conference call scheduled with analysts and the press on Thursday afternoon, shortly after confirming that the Italian luxury group is acquiring 100 percent of Versace from Capri Holdings for 1.25 billion euros, Bertelli referred to how “a lot of people may think that Versace is far away from the aesthetics of our existing brand portfolio, but I believe this is exactly a strength for our group, because there are no overlaps in terms of creativity and in terms of customers.”
For this reason, the acquisition “is super important to really reach new audiences and to express a different kind of message,” said Bertelli, who, with his mother Miuccia Prada, is understood to have been one of the main proponents of buying Versace within the group.
Also, he highlighted the Prada Group’s platform, which is “naturally scalable,” already working with Prada, Miu Miu, Church’s and Car Shoe. He admitted this “is going to be a big job, but it’s already within our way of operating.”
While Versace’s business is smaller, Bertelli said “we have been amazed” at seeing its recognition around the world, ranking “among the top five, 10 brands,” which means “the potential is huge, but we know very well that to express that potential is not a walk in the park.” However, “we believe we have the knowledge long term to make this transformation and make this brand successful.”
He touted the group’s commitment to creativity and the investments in its industrial platform and capabilities since the ‘80s, which Versace can leverage, and the work done on omnichannel distribution.
“I believe that in a moment where everybody was growing, and we maybe struggled a bit more and had to tackle difficulties, we prepared ourselves somehow for this moment when of course, the markets are not in great shape. We know our limits very well and our strengths, and so we believe we can deliver long-term success,” he said.
Bertelli underscored that he would “not talk about revolution” at Versace. “Miu Miu has been a lesson for us as we have not dramatically changed it, it’s been more of an evolution. Miu Miu has been on a remarkable growth trajectory and registered a record year in 2024, with retail sales soaring 93 percent.
“Sometimes little things here and there spark a huge difference,” Bertelli said. “I think we don’t need to change the brand, we need to just evolve it and make the right things happen and together bring back Versace to be a huge success. So we need just to be patient, and we know very well that there is no one single ingredient for success.”
In a statement, his father Patrizio Bertelli, Prada Group chairman and executive director, said the deal will “build a new chapter for a brand with which we share a strong commitment to creativity, craftmanship and heritage. We aim to continue Versace’s legacy celebrating and reinterpreting its bold and timeless aesthetic; at the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships.”
The transaction will be funded by 1.5 billion euros of new debt composed of a 1 billion euro term-loan and a 500 million euro bridge facility. It is expected to close in the second half of 2025.
Up until last week, the company was rumored to be on its way to pay 1.5 billion euros for both Versace and Jimmy Choo.
On Future Creative Direction and Management
Andrea Guerra, Prada Group chief executive officer, was asked about Dario Vitale, who in March was appointed chief creative officer, succeeding Donatella Versace, who was named brand ambassador. Prada executives did not mention Donatella Versace on the call, however, nor did they address her future and whether she would remain a brand ambassador.
There had been speculation that her stepping down as creative director helped clear the way for Capri to sell Versace. Vitale at the end of January exited his role of ready-to-wear design director at Miu Miu, and Guerra underscored that it was “his own decision, independent and very personal,” and that it was not the harbinger of this acquisition.
Pressed for further comment on finding Vitale at Versace, Guerra said,” We are happy to find him as a trusted pair of hands in such an important position for the future of the brand, we are very happy to really welcome all the team, wherever they are in the world and whatever they’re doing. We really need to be warm and give everyone the opportunity to show their impact and their talent.”
On questions about the senior management, Guerra said that “in the last three years, we have gone through an evolution in our organization, and in terms of our managerial attitude. So we have verticalized our brands, and we will continue like this. We are adding Versace, and we will have another vertical asset. From an industrial point of view, we will have a division by brands.”
As for Versace’s CEO Emmanuel Gintzburger, “we will begin the job with him,” Guerra said. Gintzburger’s future at Versace had been questioned even under Capri’s ownership since he is understood to have butted heads with Donatella Versace on several occasions.
Asked about the level of involvement of Miuccia Prada in the creative process, Guerra said “absolutelty none. The involvement will be in the fact that she’s the biggest shareholder of the company, but nothing in terms of creativity.”
Thanking Capri Holdings “for having preserved and enhanced the heritage of this wonderful brand, and despite the sector uncertainties,” Guerra said. “We look at the future with confidence, focused on a long-term strategic vision. Diligently, we will put all necessary efforts to obtain what is our final goal, which is a sustainable success.”
Guerra said future plans for Versace will be discussed further down the line but assured that “there will be no shortcuts. We need to work on foundations, and we need to be patient.”
He said the group has had the same journey with Miu Miu, in terms of positioning, image and identity, and that took “something like 36 to 48 months to reap the first fruits. So we know it. The acquisition is all about the brand, the image, the creativity, the products, the stores, the people. There will be some synergies, but this is a revenue project. This is a brand project.”
Financials
Chief financial officer Andrea Bonini said Versace is expected to achieve revenues of $810 million in 2024 with an operating profit margin forecast to be high-single-digit negative. The brand operates through a global network of 227 stores.
“Its revenue contribution is very balanced in terms of geographical areas, but also in terms of product categories, between ready-to-wear and leather goods,” he said. The Europe, Middle East and Africa region represents 42 percent of sales, followed by the Americas contributing 31 percent and the Asia-Pacific accounting for 27 percent of the total. Retail accounts for 73 percent of total sales, wholesale for 14 percent and licensing for 13 percent.
Guerra remarked on the two strong Versace licenses, for eyewear with Luxottica, which he signed when he was CEO of that company, and for fragrances with Euroitalia. “They are just great.”
By product, menswear and womenswear are split in a balanced way, and ready-to-wear and leather goods and accessories provide “broadly equal contribution,” he said.
“In the longer term, there will be a more balanced ratio between full price and outlets,” he added.
Bonini presented pro-forma figures for the fiscal year ended December 2024. The transaction projects group revenues at 6.3 billion euros and the operating profit margin would stand at around 20 percent.
First Takes on the Deal
Marco Bizzarri, chairman and investor in Elisabetta Franchi, had been rumored to be keen to buy Versace and on Thursday evening at the inauguration of the Elisabetta Franchi store in Milan, he said he was “happy that Versace did not end up in the hands of a private equity fund, which would have been the end of the brand. Versace needs an industrial platform and Prada has it and it has the skills and expertise to grow the brand.”
Bizzarri has over the years expressed his appreciation for Versace and said he was happy to see it has a future, lamenting how “the Americans did not know how to develop it.”
Bernstein’s Luca Solca said the agreement values Versace at 1.3 times its 2024 sales, which amounted to $1.03 billion in the year ending March 30.
“The acquisition will be EBIT margin dilutive for the group on a pro-forma basis, with management highlighting that sustainable revenue growth rather than a strict focus on cost synergies will be the priority,” Solca said. “Revenue and margins will likely take a hit in the short-term as channel mix is brought closer to that of Prada and Miu Miu, with results expected in the 24- to 48-month horizon.”
He added that a “key test may soon arrive if weaker economic growth places additional pressure on the main Prada and Miu Miu brands, just as management pivots to focus on a Versace turnaround.”
“This is a beautiful and brave operation for the industry in a complicated moment and for the the country, which has lost control of several brands over the years,” said Michele Norsa, special chairman adviser at Ferragamo and former CEO of brands ranging from Valentino to Ferragamo itself. Prada Group “has all the necessary skills and expertise to further grow the brand. I don’t see anything negative in this synergic deal, which allows to cover different customers.”
James Grzinic at Jefferies stated that the acquisition “had caused some investor concern given the length and scale of [Versace’s] underperformance under Capri’s ownership. It is clear that Prada will be much better equipped to support a revival of the historic Italian brand. And yet, we suspect that the debate will continue to revolve around the manner in which a sales-led revival can result in a 200 million euro type EBIT contribution from the Medusa over the longer term.”
Jelena Sokolova, senior equity analyst at Morningstar, said, “Prada purchasing Versace makes sense both financially and in terms of timing. Prada’s profitability and cash position has strengthened in recent years, boosted by its strong brand momentum. This acquisition makes strategic sense since both of these brands pass through fashion cycles and ownership of multiple brands with very different aesthetics — maximalist for Versace and minimalist for Prada and Miu Miu — could help smooth the cyclicality of performance.”
Sokolova touted Prada’s expertise in running luxury brands that Capri Holdings “lacks in comparison. Not to forget that Capri’s performance has been weak as of late and may remain so if economic weakness persists in 2025, as current market turmoil and geopolitical uncertainty suggests. Versace will need investments to reboot the brand, making it an initial drag to Prada’s short-term profitability.”
A luxury goods consultant who requested anonymity said observers should not look back at Prada’s past track record in creating a luxury conglomerate. Patrizio Bertelli bought Helmut Lang and Jil Sander in a 1990s shopping spree but sold both brands in 2006 to focus on Prada and Miu Miu and has candidly admitted the operations did not go as planned and defined them as “mistakes.”
Back then, “the founding designers were still present and active and they imagined they would continue to design with Prada merely around as an investor — but this was not the case. With Versace, it’s not one of the founders that is selling. Also the group now has a more managerial structure that could be more detached and neutral compared to Patrizio Bertelli’s passionate take on business, so I think this time around it could have more chances to succeed. Yes, there are risks, but entrepreneurs need to take risks, too, looking at opportunities to create value,” the consultant said.
Asked about the exit of Donatella Versace, the consultant believes that, while Miuccia Prada has often expressed her respect for the Italian designer, “management must have thought that it would have been unmanageable to be free to make changes with her still in place.”
In 2018, Donatella Versace reached a $2.1 billion deal to sell her family’s company to Michael Kors Holdings, which subsequently changed its name to Capri Holdings.
