It’s sung in our rap songs, referenced endlessly in our movies, the center of an American TV show and, ultimately etched into our history: Versace. But recently, the household name is making waves in the national news circuit due to its $2.1 billion purchase by Michael Kors Holdings. Michael Kors Holdings, recently renamed Capri Holdings, is expected to close the deal in the fourth quarter of 2019 and start gathering profits from the company starting in year two of its ownership. So what does this mean for the luxury brand? Well, possibly, quite a few things. Before any major fashion news sources could take a stab at it, Twitter came up with some particularly bitter predictions.

“My new long term goal is to become so rich, I can buy Versace from Michael Kors and save the world,” writes Twitter user @AregHarutyunyan. Other reactions included concerns that Versace would start showing up in discount stores like Marshalls and T.J. Maxx, the assumed fate of many Michael Kors products. Some people espoused that Gianni Versace was “rolling in his grave” over the sale and fans of the brand even took to Donatella Versace’s Instagram to beg her not to sell the family company. Donatella spoke to The Guardian and said, “We believe that being part of this group is essential to Versace’s long-term success. My passion has never been stronger. This is the perfect time for our company, which puts creativity and innovation at the core of all of its actions, to grow.” Regardless, many people still seem to think that the purchase of Versace will lead to the degradation of its brand name and its products, but is this really likely?

Many fashion insiders took to the platform to explain that Michael Kors will, in fact, have little to do with the design process of the brand. Those worried about the Versace design quality being affected should be somewhat reassured by the announcement that Donatella Versace will stay on as the creative director of the brand. The acquisition of the company seems to be a mostly financial move for the fashion conglomerate, as well as financially motivated for Versace. In fact, the brand ran at a loss from the late 90s to 2011, forcing the family to sell a 20 percent stake to Blackstone in 2014. This deal valued the fashion house at $1.4 billion. It’s believed that Versace has been able to keep its holding in the fashion world through brand recognition, domestically and internationally. It seems that love for the brand in the luxury sector as well as overseas is what solidified the sale to Capri Holdings. Former chief executive Gian Giacomo Ferraris told BoF that the company was a “sleeping giant” in 2015.

After closing 42 stores in 2017, Kors embarked on a new retail strategy that included buying the shoe company, Jimmy Choo, that same year. Capri Holdings is faced with competing against other fashion conglomerates like US companies PVH Corp. and Tapestry for dominance in the luxury sector. The company’s purchase of Versace seems to be the second move in this strategy to stay relevant and spread their consumer appeal.

On the other side of this issue is the concern that the purchase will affect consumer view of the brand, and begs the question: Will people stop buying Versace because of its association with Michael Kors? The root of this concern comes from the idea that Michael Kors is a “mall brand” and not on the same level as brands like Versace.  “I’m mildly surprised by the Kors/Versace deal because the brands seem to have such different markets,” says Emerson Professor Mary Harkins who teaches a fashion history course. “The personality of the Kors brand seems very different from that of Versace. Versace is known for its appeal to wealthy, jet-set Europeans.” Harkins also notes that Michael Kors is segmented by higher-end and more accessible brands within the company. Michael Michael Kors is his “bread and butter” line which brings in most of his revenue due to its lower price point. Versace has no such distinctions within its brand. “To me that means the future of Versace could go in a variety of directions. Kors could maintain its exclusive branding or create a bread & butter line or alter the Versace image completely,” Harkin finishes. It seems only time will tell.  

Illustration by Francisco Guglielmino