Text Federico Armani
Michael Kors has bought Versace for 1.83 billion euro. Today many Italian companies belong to foreigners. And a collective, populist fear of pillage is on the rise. From the times of the Renaissance and even before, throughout all of the last centuries, except the penultimate one, Italy has always been a land conquered by foreigners: French, Spanish and Austrians. But rather than raising an alarm, shouldn’t we perhaps just accept this as a tradition?
For many, the concept of the takeover feels like a sell-out, and for others it is a chance to start again. One thing is certain: there is a certain amount of confusion here. The attention paid by the participants in the operation to the value of all things Italian seems to have taken a back seat. Donatella Versace’s declaration to the press “I’m staying here. I’m tied, hands and feet here. The Holding wants our Italian know-how.” hasn’t seemed to count for much after all.
The name that Michael Kors Holding Limited took after the takeover says it all: Capri Holden Limited, a company with a name that pays tribute to the Italian island, uniting the Versace brand, Jimmy Choo and Michael Kors under one name. The American group purchased 80% of the company in the form of the Versace family’s shares and the remaining 20% from the Blackstone hedge fund. The Versace family will receive 150 million euro of the purchase price in the form of shares in Capri Holdings Limited (equal to 2,395,170 ordinary shares) from the takeover transaction. The operation witnessed the involvement of law offices Cleary Gottlieb Steen & Hamilton (which successfully represented a customer of the calibre of Walt Disney Company in 2018 during the purchase of an important part of 21st Century Fox in a 71.3 billion dollar deal), Wachtell Lipton Rosen & Katz, Gianni Origoni, Chiomenti and Orsingher Ortu. GiVi Holding (the Holding of the Versace family) was represented by Donatella Versace and CEO Jonathan Akeroyd, as well as Cleary Gottlieb and the Chiomenti law firm from Rome. The Blackstone hedge fund was assisted by Gianni Origoni Grippo Cappelli, while the Michael Kors group was assisted by Orsingher Ortu. Regarding growth prospects: 8 billion dollars in the long term and a diversification of the geographical profile, reducing the Americas from 66% to 57% of the revenues, while taking Europe from 23% to 24% and Asia from 11% to 19%. The intention is clear: to exploit the iconic drive of the Medusa brand and differentiate the range of the Holding of Kors. Some of the most interesting prospects for the brand include an increase in points of sale from 200 to 300 stores, the reinforcement of the e-commerce market and an expansion of the accessories and footwear markets from 35 to 60% of the revenues: a revolution that will also shake up another important piece of the Holding puzzle, Jimmy Choo, which cost 1.2 billion dollars and is ready to increase the accessories market so that it accounts for 50% of its revenues.
The takeover trend in the luxury and fashion sector shows no signs of stopping, as we are reminded by the recent transaction by the LVMH group in 2017, which invested 12.5 billion euro to gain full control of Christian Dior. And the same can be said for the trend in Italy too. According to KPMG, between the beginning of 2017 and the first half of 2018, more than 60 (i.e. 20%) of the 327 purchasing operations registered in the world of fashion concerned an Italian company. The Chinese are well aware of this, having accumulated shares in 514 Italian companies in 2017, for a total of 26,000 employees and a turnover of 13,991 million euro. It is important to look at the buyer, to choose him wisely, and discover synergies where we would only have seen friends or enemies not long ago. By following this line of reasoning, Versace seems to have the chance to become more Italian than ever. “Donatella’s style is at the heart of the aesthetic design of Versace. She will continue to lead the company’s creative vision,” explained John D. Idol, CEO of Michael Kors Holdings Limited. “My passion has never been stronger,” added Donatella Versace in an interview that appeared in Cosmopolitan.
Who is Michael Kors? In Italy he is not very well-known: he’s the ‘bag man’ and the judge of Project Runway. Born in 1959 and brought up in a suburb of Long Island, his first model was his mother: he helped her design the dress for her second wedding when he is said to have been only five years old. It was his mother who gave him a garage in which to start his business at the age of nineteen. His grandfather was a dandy, an Olympic champion in shopping. He worked in fashion retail, the same sector in which Michael took his first job, designing and selling clothes at Lothar’s, the French store in Manhattan, patronized by the likes of Greta Garbo, Diana Ross and Muhammad Alì. If it hadn’t been for his appearances at Studio 54, one might have said that Kors thought about nothing other than work, for which he had also abandoned his studies at the Fashion Institute of Technology. At the age of 22, he organized his first runway show in the editorial office of the New York Magazine. The garments that he transported using the subway that day, closed in canvas bags, would soon be evaluated by Anna Wintour who, the Telegraph reports, wrote: “Kors wants his collections to be luxurious, simple, interchangeable.” That was the period in which he established his brand.
Ten years later, shortly after having inaugurated the KORS Michael Kors line, the abandonment of the project by the Compagnia Internazionale Abbigliamento USA, which managed its production, was devastating for the company, forcing the businessman to declare bankruptcy in the early Nineties. It would seem that producing the low-cost line by Kors had become burdensome for Compagnia Internazionale. “Due to the loss of the profits from the licenses,” Kors had stated in an interview with the New York Times in 1993 “we had no other choice. It was a combination of many things, including the loss of volumes and many stores, especially the small boutiques. Over the last two years we have lost between 15 and 20 stores nationwide.”
In 1997 Kors arrived in Paris. With his brand rescued by the giant LVMH, he had learned that it was imperative not to give up control. As the new creative director of Céline, he knew exactly where he was headed: “Many Parisian fashion houses were the distillate of fine tailoring, in first night at the opera style,” he said in an interview in Marie Claire. But not Céline, which combined couture and sportswear. “There were people in Paris who told me you can’t wear sneakers on the catwalk, stop drinking Coca-Cola. It’s too American. Paris was suffering as a result of the fact that it was old. Then Marc [Jacobs] arrived at Louis Vuitton in the same season when I arrived at Céline: two American boys. The world was changing.” Until Kors’ arrival, Céline had never been known for prêt-à-porter. Many of the pieces that would be seen during those years resembled the collection of the same name presented in New York: which was not bad news, at least in terms of sales.
When he left Céline, in 2002, Kors had brought about a small revolution in the French fashion house. He left suddenly but Kors was pulled away strongly and forcefully by his desire to dedicate his efforts to his own brand. However, no one could ever have bet on the sheer scale of the results to come. The brand grew in the years that followed, then in 2003, when 33% of its shares were sold by LVMH to external investors such as Silas Chou and Lawrence Stroll, the MICHAEL Michael Kors and KORS Michael Kors lines were expanded and the company launched its production of the accessories – including bags – which have since invaded the streets all over the world. Here the entrepreneurial vision of Kors was equally important as the investment by Chou and Stroll who, through their company, Sportswear Holdings Limited, established separate agreements for purchasing the sources that accounted for 85% of the company: a third of the activities of Kors held by LVMH, the 10% that Onward Kashiyama USA had purchased in 2000 and the rest owned by John Orchulli, the designer’s long term sales partner.
This was a period of rebirth resulting in fame that would lead to Michael Kors taking up the role of judge in Project Runway, the reality TV show presented by Heidi Klum. A move that confirmed the need for Kors to infiltrate pop culture, to speak to the mass market without fear of being frowned on by the élite. In 2011 the company was listed on the stock exchange: in 2014 its share value rose by 14%.
The pursuit of quality and the attention to detail drove Kors to Italy. For years he worked in Crema – a manufacturing district for accessories – and he has always tried to maintain an Italian manufacturing chain. For a successful American businessman there seems to be no difference between loving a place and wanting to draw out all its potentials. He adores spending every moment of his spare time in Italy, from Lake Como to Capri: “Heaven is eating clams in a 3-hour long lunch at the Fontelina restaurant, in Capri, where I come every year with my husband Lance LePere. The scenery is a pleasure for all the senses –the rocks, the colours of the sea, the striped sun umbrellas and the boats on the horizon,” he told The New York Times, with no fear of being rhetorical.
The fact is that it is the success of the brand that Kors and the Versace family seem to want to pursue. The diehard protectors of ‘Made in Italy’ can relax, as also confirmed by Matteo Marzotto, in a speech later reported by Il Sole 24ore. “The only thing I have to say,” said the manager“is that the Made in Italy stamp of the company is not going anywhere. The ownership of a company doesn’t change its nationality; the owners are of a different nationality, not the company. If Michael Kors, an extremely successful group, has seen an investment possibility in Versace, the most profitable thing that Michael Kors can do as a company is to keep Versace 100% Italian.”
Moreover, as Donatella Versace herself had also confirmed, no Italian investors had come forward to take over the Medusa, and neither was there any sign of the much-rumoured French investor on everyone’s lips in the months before the purchase. The differences in vision between the various players of Italian haute couture also made it impossible to imagine an Italian holding that could compete against increasingly large groups in a sector that is becoming more and more cut-throat and incessantly churning out higher and higher figures. Many will just have to make do with the European spirit that Kors developed at Céline, and the attention and passion for our country shown by the American designer and businessman. If traditional luxury is based on a history and a heritage born in Europe, with European dynamics and visions, perhaps the new concept of luxury can build on that, adding the innovation of a business model that reflects the vitality, dynamism and democratic approaches that an American perspective can bring, without forgoing the creativity that makes Europe and Italy an inextinguishable reference model.
“Versace will create many new jobs. We produce everything here, including our t-shirts. The ‘Made in Italy’ label is a value which provides prospects for growth. We will be opening two companies for accessories such as shoes and bags and about a hundred stores in the space of a year and a half,” stated Donatella Versace to La Stampa. Not a hint of a victim complex for a story that is starting again based on trust.