Michael Kors snaps up Italy’s Versace — sources

In this Friday, Sept. 21, 2018 file photo, Donatella Versace comes on the catwalk at the end of Versace's women's 2019 Spring-Summer collection, unveiled during the Fashion Week in Milan, Italy. An Italian newspaper report says that the Versace group is on the verge of announcing its sale to Michael Kors. (AP)
Updated 24 September 2018
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Michael Kors snaps up Italy’s Versace — sources

  • Donatella Versace called staff meeting for Tuesday - source
  • Family to retain a role, Blackstone will fully exit - sources

LONDON: US fashion group Michael Kors Holdings Ltd. has agreed to take control of Italy’s Versace in a deal that could value the company at $2 billion, sources familiar with the matter said on Monday.
The deal comes as budding luxury conglomerates, including Michael Kors’ US rival Tapestry, owner of Coach and Kate Spade, are trying to make in-roads into an industry still dominated by major European players, including Louis Vuitton owner LVMH.
Michael Kors, whose namesake label is best known for its leather handbags, has made no secret of its ambition to grow its portfolio of high-end brands after swooping on British stiletto-heel maker Jimmy Choo for $1.2 billion last year.
Versace is one of a clutch of family-owned, independent Italian brands that have regularly been cited as attractive targets at a time when the luxury industry is riding high on strong demand from Chinese consumers.
But not all brands have benefited equally, with some struggling to refresh their image or products to capture a younger audience, and some fashion groups are looking to diversify with more labels to face such challenges.
The deal gives Michael Kors a mega-brand and red carpet favorite that is among the most recognizable and followed fashion labels in the world. Two of the three sources who spoke to Reuters said the company had agreed to pay a large premium for Versace, known for its Medusa head logo.
Michael Kors could not immediately be reached for comment. Versace declined to comment.
Donatella Versace, sister of late founder Gianni who doubles as artistic director and vice president of the Milan-based group, has called a staff meeting for Tuesday, according to a person who was briefed by a company employee.
The Italian fashion icon has been considering a market listing after US private equity group Blackstone bought a 20 percent stake back in 2014 to fund overseas expansion, although Chief Executive Jonathan Akeroyd told Reuters earlier this year there was no rush for a market debut.
After investing in Versace at a high multiple, Blackstone found the fashion group’s performance disappointing and not sufficient to justify a market listing, said one of the sources, who is close to the family.
“They gradually persuaded the family to look into a possible sale and introduced them to a series of buyers, including Michael Kors,” the person added.
“Blackstone wasn’t going to put any more money into it. They needed a buyer who could make heavy investments.”
“OVERPRICED“
French fashion houses including Paris-based Kering were among those holding talks with the Versace family, the sources said, but considered the price too expensive.
“They didn’t feel the need to invest so much money into another Italian fashion brand. It was overpriced,” the source said.
Kering declined to comment.
As part of the deal, Blackstone will fully exit the Italian company, while the Versace family, which owns the rest of the fashion house, will keep a role, the sources said.
Blackstone declined to comment.
An official announcement is expected this week, the sources said.
Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show the Milan-based group last year posted sales of 668 million euros ($786 million) and earnings before interest, tax, depreciation and appreciation (EBITDA) of 44.6 million euros.
The group last year returned to a net profit of just under 15 million euros compared with a net loss of 7.9 million euros the previous year. ($1 = 0.8499 euros)


The Six: Celebrate the Man Booker announcement with these regional reads

Books from the Middle East to read. (Shutterstock)
Updated 17 October 2018
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The Six: Celebrate the Man Booker announcement with these regional reads

DUBAI: With the 2018 Man Booker prize being announced on Tuesday, we take a look at six books from the Middle East that deserve to be read before the year is over.

‘Where the Bird Disappeared’
Taking inspiration from the stories of Prophet Zakariyya and his son Yahya, Palestinian poet and writer Ghassan Zaqtan’s book is a beautiful novel set in the village of Zakariyya, in modern-day Palestine.

‘Ascension to Death’
Syrian novelist Mamdouh Azzam tells the story of a young girl’s fate in a southern Syrian village.

‘Tippu Tip’
Stuart Laing writes a biography that transports the reader into an extraordinary world with an exotic cast of characters.

‘Elsewhere, Home’
Written by Leila Aboulela, the book is an enchanting collection of short stories that stretch from Khartoum to Scotland.

‘The Merchant of Syria’
Diana Darke interweaves the story of a cloth merchant with the development of Syria in an insightful look at the life of a businessman who expands his trade.

‘The Baghdad Clock’
Shahad Al-Rawi’s extraordinary novel turns life in embattled Iraq into a fantastical world of characters and memories by following two young girls who meet during Operation Desert Storm in 1991.