Finance

Michael Kors shares sink amid Versace rumors

Michael Kors shares sink amid Versace rumors

Artistic Director of the fashion giant and Vice President of the company said to be worth about $2 billion, Donatella Versace, has reportedly called a meeting in Milan for Tuesday. There have even been guessing games as to what Michael Kors would rename his holding company, should he choose to do so.

Models present creations at the Versace show during Milan Fashion Week Spring 2019 in Milan, Italy, September 21, 2018.

Another comment reads: "Don't let the rancid oppressive stain of a fashion house known as Michael Kors take away what made Versace great".

It also cited rumours saying that the buyer could be US fashion group Michael Kors Holdings Ltd's (KORS.N) or jeweler Tiffany & Co (TIF.N).

However it looks like Michael Kors shareholders weren't happy about the rumoured sale as shares in the brand fell by 8.7 percent following news of the possible transaction.

Blackstone Group LP owns 20 percent of Versace, and it is unclear if they will be selling their stake as well.

A note from Euromonitor International analyst Florence Allday said, "The news of Versace's acquisition by Michael Kors Holdings will come as quite a shock to followers, admirers and customers of the iconic Italian brand, which has always been characterised by its fierce narrative and aesthetic as well as its strong family values and independence". For Hitchmough, this will allow the brand to "annex further super luxury brands" without the "taint and consumer backlash of going under a more populist high street name".

The family has tightly controlled the brand since designer Gianni Versace's murder in 1997. A spokesman for Blackstone had no comment.

Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show that a year ago it posted sales of 668 million euros ($786 million) and earnings before interest, tax, depreciation and appreciation (EBITDA) of 44.6 million euros.

Last year it returned to a net profit of just under 15 million euros compared with a net loss of 7.9 million euros the previous year.


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