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The Case for a Prada-Versace Union: Analyzing a Potential Luxury Mega-Deal
Sectors & Markets
15 January, 2025
The luxury fashion industry is abuzz with rumours that Prada Group is considering acquiring the iconic Versace brand from Capri Holdings. This potential move could reshape the dynamics of high fashion, uniting two brands led by legendary women designers: Miuccia Prada, co-creative director of Prada, and Donatella Versace, artistic director of Versace.
Prada Group and Capri Holdings have both expanded their portfolios through strategic acquisitions, solidifying their positions in the luxury market:
Prada Group and Capri Holdings have demonstrated contrasting financial trajectories in recent years. Below are distinct tables highlighting their performance over the past two years, based on their annual reports.
| Year (ending 31 December) | Net Revenue (€m) | Growth (%) | Net Income (€m) | Growth (%) |
|---|---|---|---|---|
| 2024 | 3.829* | 18%* | NA | NA |
| 2023 | 4.726 | 12,5% | 671 | 44% |
| 2022 | 4.200 | 24,8% | 465 | 58% |
| 2021 | 3.365 | 38,9% | 294 | 641% |
*2024 Prada revenue for 9 months ending 30 September 2024
From a portfolio perspective, Miu Miu has emerged as the standout performer within Prada Group's brand matrix, delivering a remarkable 58% surge in retail performance for FY23. Looking at the Group's 9M23 financials, total revenues clock in at €3,83 billion, with the core Prada maison contributing €2,53 billion of the top line. Miu Miu’s €854 million revenue contribution (+97% vs same period in 2023) validates the brand's recent creative direction and demonstrates the success of its repositioning strategy in the contemporary luxury segment.
| Year | Net Revenue ($m) | Growth (%) | Net Income ($m) | Growth (%) |
|---|---|---|---|---|
| 2024 (ending 30 March) | 5.170 | -8% | -229 | -137% |
| 2023 (ending 1 April) | 5.619 | -0,6% | 619 | -24,8% |
| 2022 (ending 2 April) | 5.654 | 39,3% | 823 | -503,4% |
Capri Holdings has faced challenges with declining revenues and margins, highlighting operational pressures in a competitive market. The Michael Kors parent has posted three consecutive years of margin compression, with net income contracting from $823 million in FY22 to -$229 million in FY24.
The table below highlights the net revenues of Prada and Versace over the past four years:
| Year (ending 31 December) | Prada Revenue (€m) | Prada Growth (%) | Versace Revenue (€m) | Versace Growth (%) |
|---|---|---|---|---|
| 2024 | 2.534* | 4%* | 1.030 | -6.9% |
| 2023 | 3.912 | 7.2% | 1.106 | 1.7% |
| 2022 | 3.647 | 25.7% | 1.088 | 51.5% |
| 2021 | 2.901 | 44.2% | 718 | -14.8% |
*2024 Prada revenue for 9 months ending 30 September 2024
For Prada Group, acquiring Versace would represent a significant pivot in their portfolio strategy. Currently, Prada Group has demonstrated strong organic growth capabilities, with both Prada and Miu Miu showing robust performance trajectories (7.2% and 58% growth respectively). Their track record in brand management suggests potential upside in applying their luxury expertise to Versace's operations.
Versace’s integration into Prada Group could provide advantages such as stabilising volatile performance and unlocking growth through enhanced operational expertise and distribution strategies.
For Capri Holdings, divesting Versace would significantly impact their market positioning but might allow them to refocus their portfolio and operational strategy in the accessible luxury segment.
Cover Image: Official Websites of Prada and Versace