Can you mix Prada with Versace, or is that a fashion faux pas? One iconic Italian fashion brand is buying another — the Prada Group announced this week that it’s buying the luxury design house Versace from fashion group Capri Holdings for about $1.4 billion.
On its call announcing the sale, Prada said the acquisition would allow it to reach a different kind of customer.
One way to think about the difference is Prada’s clothing being more minimalist and Versace’s more maximalist. Versace has a “very dynamic color, very unique look, a little bit of that Roman Caligula look”, according to Milton Pedraza, who leads the Luxury Institute, a consulting firm, and has formerly done some work for Versace.
Pedraza said one challenge Versace faces is that its clothes aren’t necessarily everyday staples — Versace’s revenue dropped 15% last quarter. He said that with this acquisition, Prada is getting a well-respected fixer-upper.
The acquisition could put Prada on a new path where we see “at least the beginnings of a luxury fashion conglomerate that is Italian-owned and Italian-driven,” said Pedraza.
One hurdle such a conglomerate might face is finding its customers around the world, said Susan Scafidi, founder of the Fashion Law Institute at Fordham.
“The Made in Italy label is key to luxury, but Made in Italy has to sell outside Italy,” she said. “Italy is a substantial market, but it's not anywhere near as large as the U.S.”
According to Scafidi, aspirational consumers are a big part of that market. However, if tariffs make those colorful Caligula-type pieces more expensive, those types of buyers might hold off.
