Prada is gearing up to welcome Versace back to Milan. “We’re ready for this journey,” chief executive officer Andrea Guerra told investors on a call following the €1.25 billion acquisition announcement from Capri Holdings on Thursday.
The group’s goal for Versace is sustainable, lasting success, Guerra said. “What will be the KPI, what will be the performance indicator?” Guerra asked. “Sustainable revenue growth in the long term.”
The transformation strategy will be informed by the group’s reinvigoration of its own brands, especially Miu Miu. “There will be no shortcuts,” Guerra said, noting that the group has seen with its own brands that it takes time to build foundations, image and identity solidly. “The Miu Miu journey has taken something like 36 to 48 months to reap the first fruits.” Now, Miu Miu is generating record revenues, up 93 per cent in fiscal 2024. Miu Miu accounts for 25 per cent of Prada Group’s business as of 2024, compared with 15 per cent the previous year — and has passed the €1 billion sales milestone.
Versace has a way to go. Revenue dropped 15 per cent to $193 million in the third quarter of fiscal 2025, as Capri revenues fell 11.6 per cent. For fiscal 2025, Versace is expected to achieve revenues of $810 million, down from $1 billion in 2024. Guerra expects that it will take over 18 to 24 months to achieve the desired sustainable revenue growth.
There are bright spots. “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,” Prada Group CFO Andrea Bonini noted on Thursday. He added that Capri will fund certain transaction expenses. “We have raised additional funds of €1.5 billion composed of €1 billion term loan and a €500 million bridge facility,” he added. “This allows us to retain significant balance sheet flexibility considering the cash balance and undrawn committed facilities.” The deal is expected to close in mid-2025, pending approval.
“We have been amazed seeing that Versace the brand has always been recognised between the top five and top 10 brands around the world, even if the business is much smaller,” Prada Group CMO Lorenzo Bertelli said on Thursday. “This means that the potential is huge, but we know very well that to express the potential is not a walk in the park. We believe we have the knowledge long term to make this transformation and make this brand successful.”
Investors are optimistic. UBS issued a ‘buy’ valuation for Prada Group on Thursday, writing in a note that analysts see the deal in a positive light as Italy’s response to French conglomerates. Morningstar senior equity analyst Jelena Sokolova is also confident, she said in a note following the news, given Prada’s expertise in running luxury brands (which, she says, Capri lacked).
Prada declined to share details about specific plans for Versace under the group. “We will have plenty of time in the future to talk about plans,” Guerra said. “We have signed an agreement today, an agreement for the transaction and it’ll take time. Hopefully we will have a fantastic team working on the density, working on productivity, working on consumers, working on creativity like hell.”
What Versace will come to look like under Prada is the question on investors’ — and consumers’ — minds. While it’s still early, the conference call did offer some indicators.
The product
There’s little doubt that Versace will remain Versace: loud, glamorous, logo-heavy. The Prada team made it clear that Versace’s strong identity was appealing to the group for its difference from Prada and Miu Miu.
“People may think that it’s far away from the aesthetics of our existing portfolio like Miu Miu and Prada, but I think this is exactly a strength for our group, because there are no overlaps in terms of creativity or in terms of customer,” Bertelli said. “This is super important to really reach new audiences of customers and to express a different kind of message.”
The Prada executives also highlighted that an aesthetic overhaul is not necessary to improve a brand’s business. “Miu Miu is a lesson for us and for the market. We have not dramatically changed anything in Miu Miu; it’s been more of an evolution,” Bertelli added. “So we don’t need to [completely] change the brand to revolutionise it.”
As for what this evolution will look like, Bernstein luxury goods analyst Luca Solca expects that Prada will endeavour to “take Versace back to its roots, but in an up-to-date way”. “That’s the task of [new creative director Dario] Vitale,” he adds. This means the brand may lean further into its couture roots. “When the couture was there, I could easily associate it with the rich and famous,” fashion critic and creator Osama Chabbi told Vogue Business amid the acquisition rumours.
On Thursday’s call, Solca asked whether Prada had a hand in Vitale’s appointment to the chief creative officer role last month. Vitale joined Versace from Miu Miu, where he worked from 2010 until January of this year. Guerra laughed. “When Dario gave his resignation, we tried to hold him where he was. It has been his own decision,” he said. “We had no consultancy role, we had no commissions, we had nothing. No, no it has been his total independent and very personal decision.” Solca asked if Guerra is happy to find “a trusted pair of hands” at the helm of the group’s newly acquired brand. “We are very happy to welcome all [of] the Versace team,” Guerra replied diplomatically. He also said he hopes to find “lots of great talents” in the current team.
Vitale may inject a little of Miu Miu’s sensibility into the brand, but the plans to keep existing Versace teams on board further speak to Prada’s intention to embrace the Versace aesthetic.
Besides the fashion, Versace has many offshoots, from fragrance to homeware to hotels. Many of these are via licensing agreements: Timex Group for watches, EssilorLuxottica Group for eyewear, EuroItalia for fragrance and Lifestyle Design Group for home.
Analysts note that these count for a high proportion of sales, but may dilute brand identity. Guerra, for what it’s worth, called the eyewear and fragrance licences “important” on the call.
Marketing and operations
Versace needs to get back to storytelling, experts agree.
For Solca, a new marketing mix will be the key for Versace to demonstrate its incoming invigoration. “The brand is well known, but it also looks old and trivialised, to some extent,” he says. “Hence the challenge.” Morningstar’s Sokolova is also expecting a marketing overhaul. “I imagine more investment behind communication and focus on communicating the creative vision,” she says, noting that, though Versace is known, it’s not necessarily on people’s radars. “Improving brand appeal would be the near-term goal.”
Prada Group also acknowledged that Versace has wavered amid the luxury industry’s recent “suffering”, adding that this can result in certain channels growing too heavy. Right now, Versace is about 20 per cent wholesale versus Prada’s rough 9 per cent, UBS flagged in a note. The goal, Prada executives said, is to achieve a more balanced ratio of full-price versus outlet, which will be comparable to Prada and Miu Miu’s channel mix.
Like Prada, a significant amount of Versace’s manufacturing is located in Italy. But the brand also produces in other EMEA (Europe, the Middle East and Africa) regions, North America and Asia, according to Capri. Solca doesn’t anticipate much change in regards to Versace’s manufacturing, while Sokolova expects that more will move in-house. Prada does, after all, believe in the direct management of factories. Wherever it is, it will remain separate from Prada Group’s other brands. “From an industrial point of view, today, we have a division by brands,” Guerra said.
On Thursday, Guerra confirmed that the new Versace organisational structure will mimic that of Prada and Miu Miu. “In the last three years, we have gone through an evolution in our organisation in terms of our managerial attitude,” he said. Prada Group has “verticalised” its brands, and will continue down this route. As for Versace’s offices, the brand’s base is sure to decamp from Capri’s New York headquarters to Milan — a return to its home turf. Whether the brand will set up camp at Prada Group’s HQ remains to be seen, but given Guerra’s promise of vertical integration, it’s not an unlikely outcome.
“We are adding Versace and we will have another vertical asset,” he said. Each brand has its own corporate team, and the same will go for Versace. The brand is currently led by CEO Emmanuel Gintzburger. “We will begin the job with him,” Guerra said.
On the heels of the news, a photo of Donatella Versace with Miuccia Prada circulated online. Donatella is staying close as a brand ambassador. As for Mrs Prada’s level of involvement? “Absolutely none,” Bonini said. “The involvement will be in the fact that she’s the biggest shareholder of the company, but nothing in terms of creativity.”
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