“Unexpected but logical.”
“We are delighted to welcome Versace to the Prada Group.” Those were the words of the Italian fashion group’s CEO Patrizio Bertelli as he confirmed Thursday the merger of the country’s two iconic fashion brands. Even though there have been more signs of this recently, such as the departure of Donatella Versace, the takeover is still unexpected. It’s an unexpected but logical move.
Prada and Versace are “two fundamentally different brands in terms of their vision, inspiration and aspirations, and the type of customers they target.” And this “extreme diversity” makes the project interesting in itself. But it also leaves no doubt: with Versace, Prada gets not a cash cow, but a lot of work for a company that has already been renamed from “Domani” to “Pradace”.
The aforementioned backstory: while Prada continues to post double-digit growth, even in “very challenging times for the luxury goods sector,” Versace slipped into negative territory last year, reporting a loss of about 21 million euros. According to financial portal Bloomberg, a quick and easy resolution is not expected here, and investors should be patient.
“Hugely popular.”
According to Bloomberg, the math could still work out for Prada, given Versace’s “huge name recognition” and “rich archive with many iconic styles.” “Versace’s “maximalist aesthetic” is also a far cry from the “elegant minimalism of Prada” and the “cool-girl chic” of Prada subsidiary Miu Miu. “Prada believes there will be little overlap in terms of clients,” while Versace already has a new creative director in place to lead the brand and knows Prada very well, as Bloomberg explained.
Donatella Versace stepped down as creative director just a few weeks ago
According to observers, Donatella Versace’s resignation, announced just a few weeks ago, has set the course for the future development of the fashion house. Dario Virale, who previously played a key role as chief designer and contributed to the continued success of Prada subsidiary Miu Miu, has taken his place. To make Versace “as much of a must-have accessory as Miu Miu,” Virale now needs to “rework the tired Versace image.” Less radical than Bloomberg, Bertelli spoke of “rethinking” that context. Prada also wants to continue the legacy of Gianni Versace and pay homage to his “bold and timeless aesthetic.”
A counterweight to the “French giants”
The designer, who was murdered in Miami in 1997, founded the company in 1978 and subsequently made the Versace name one of the main symbols of Made in Italy fashion to this day. According to Forbes business magazine, with additional investment and support, Versace could “take Prada to the next level.” And Prada could strengthen its position in the global luxury goods segment. It is also an Italian challenge to international, and especially French, competitors.
While Italy remains one of the largest producers of luxury goods in the global market, many companies operating here have long been in the hands of foreigners. This is also the case for Versace, which is now moving from US-based Capri Holding back to Italy, namely Prada in Milan, for the equivalent of €1.25 billion.
According to financial platform Marketscreener, Prada’s goal is “to become Italy’s leading luxury goods conglomerate.” And it is a “significant step forward” in a market dominated by French groups LVMH (Moet Hennessy Louis Vuitton) and Kering. Domani also sees a possible “tipping point” – they expect a player “who could compete with the two French giants – certainly not on equal footing, but still more aggressively than before.”
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