Versace fans are terrified that a $2 billion deal with Michael Kors will 'kill' the fashion brand. Here's what the companies say will actually change.

Michael Kors is buying Versace in a $2.12 billion deal.

When news broke yesterday that the acquisition was near, many Versace fans revolted.

An American company taking over the Italian luxury fashion designer, critics argued, would be the death of the brand. Most Versace bags cost more than $2,000, while you can buy a Michael Kors handbag at Macy's for less than $100.

"Don't let MKors buy any % of Versace. He will ruin it. He will kill it," one of the dozens of angry comments that flooded Instagram reads.

With the announcement that Michael Kors has agreed to acquire Versace, the companies provided some broad guidelines regarding the future of the brand. As a part of the deal, Michael Kors is changing its name to Capri Holdings. And, the company has a number of plans regarding the evolution of Versace.

Here's how the Michael Kors deal will change Versace, according to a press release from the companies:

  • More stores will open. Globally, Versace's footprint is set to increase from approximately 200 to 300 stores. For comparison, Prada has 394 stores, Gucci has 529, and Michael Kors has 829, according to Cowen and Company.

  • Versace plans to sell a ton more shoes and accessories. The company plans to have men's and women's accessories and footwear go from 35% of revenues to a whopping 60%.

  • Online shopping's importance is on the rise. As a part of Capri Holdings, Versace will "accelerate e-commerce and omni-channel development."

  • Revenue should more than double. The company's goal is to grow Versace's revenue to $2 billion. In 2017, Versace says it posted revenue of 686 million euros, or $808 million, according Bloomberg.

  • The company will "build on Versace's luxury runway momentum." Versace's spring 2019 runway show concluded less than a week ago.

  • Versace's marketing will be "enhanced." In July, fashion search platform Lyst reported that Versace was the seventh hottest brand in fashion, based on online shoppers' preferences and behaviors. The brand rose 21 spots in the ranking since the first quarter of 2018, thanks in part to the miniseries "The Assassination of Gianni Versace: American Crime Story," about the death of the company's founder.

The changes are in line with what Cowen analyst Oliver Chen says Versace needs to do to become a multi-billion dollar brand.

"Versace needs to grow its direct-to-consumer physical store and online presence," Chen said in a note to clients on Monday. "In our view, the online capabilities are behind with respect to social media, fashion, and lifestyle content, shipping speed, and customer engagement; an acquirer could step change innovation online."

Some things are not supposed to change with the deal.

Donatella Versace, currently the brand's creative director, will "continue to lead the company’s creative vision," according to a statement from Michael Kors' CEO John Idol.

Donatella, her brother Santo, and daughter Allegro — who currently own 80% of Versace — will become shareholders of Capri Holdings. Jonathan Akeroyd, who has been Versace's CEO since 2016, will continue to lead Versace's management team.

See Also: