In the 24 hours since news broke Monday that Michael Kors's parent company, Michael Kors Holdings Limited (now renamed to Capri Holdings Limited), would acquire Versace in a $2 billion deal, the Internet lost it.
On Tuesday, John D. Idol, chairman and CEO of Michael Kors Holdings Limited confirmed the deal. "The acquisition of Versace is an important milestone for our group," he said in a press release. "For over 40 years, Versace has represented the epitome of Italian fashion luxury, a testament to the brand’s timeless heritage. We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth."
However, fans of the Italian luxury brand started by the late Gianni Versace, and run by his sister, Donatella Versace, since his death, have been devastated over the changes they worry an acquisition might bring.
"[Versace] founded in 1978 by Gianni Versace. Destroyed in 2018 by [Michael Kors]. It was a good 40 years," actor Drake Bell tweeted. Others reiterated his sentiments as if the fashion brand was nearing some sort of tragic death.
But business experts who study fashion say the deal could be a good thing.
Sociologist Anna Akbari, PhD, who worked for a decade in the fashion industry, believes Versace fans and consumers should not be quick to assume that Michael Kors Ltd will do a complete overhaul of the designs that Versace is so famous for.
"This strikes me less as an indication that Michael Kors will try to shape Versace into the Michael Kors aesthetic, and more possibly that Michael Kors is looking to diversify and grow its portfolio as it develops into a significant fashion conglomerate," Akbari tells ELLE.
This is not the first time Michael Kors Holdings Limited, which oversees Michael Kors, the fashion brand, has acquired a well-known luxury company. In 2017, it purchased Jimmy Choo in a $1.2 billion deal. Last year, there was another major luxury acquisition when Coach bought Kate Spade for $2.4 billion.
Leslie Davis Burns, author of The Business of Fashion: Designing, Manufacturing, and Marketing, explains why it wouldn't be in Michael Kors' best interest to completely change the design direction of Versace.
"The Versace family brings the image, glamour, and identity of the brand to this arrangement,"Burns says. "It would be important that this association continues."
And according to the reported acquisition agreement, there's a very good chance it will. Idol said Tuesday the Versace family will indeed still play a role in the company.
“Donatella’s iconic style is at the heart of the design aesthetic of Versace," he said. "She will continue to lead the company’s creative vision. I am thrilled to have the opportunity to work with Donatella on Versace’s next chapter of growth.”
But another concern for shoppers is not just the possibility of the brand's clothing changing, but also the quality of its items and where they will be sold. Some Michael Kors lines are available for purchase at inexpensive retailers like T.J. Maxx and Marshall's, and opposers of the Kors-Versace acquisition, like the actor Drake Bell, fear that will happen with Versace.
Akbari says marketing products for a larger audience is nothing new, though. "Brands — even luxury brands — selling multiple price points in an effort to offer an aspirational 'affordable luxury' option for a wider consumer audience has been an active strategy for many brands for years," she says.
But Burns agrees that public perception can become skewed when companies expand their reach.
"Brand prestige and image is all about perceived association — association with influencers, association with celebrities, association with retailers," she says. "Therefore, when the Michael Kors brand becomes associated with retailers beyond luxury retailers, then, yes, the image of the brand can change."
Still, the full details of the reported agreement have not been released, and these concerns will likely be addressed once the deal is finalized. "The contract will outline how the businesses will be operated and the decision making for the creative direction of Versace," Burns says.
Donatella Versace herself released a statement, calling the acquisition "a very exciting moment for Versace." She, her brother Santo, and her daughter Allegra will be shareholders in Capri Holdings Ltd.
"We believe that being part of this group is essential to Versace’s long-term success," Donatella said. "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.”
If Donatella approves, then so can the rest of the fashion world.