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In the middle of Milan Fashion Week, news broke Tuesday that Michael Kors was buying Versace, the iconic Italian luxury house, for $2.1 billion. Like a Medusa print dress, reactions to the deal were… colorful.
Some gasped at the price tag. Others noted the course-change for a house on the turnaround. Most, however, were simply shocked. Yet, despite public outcry, Versace’s recent acquisition may actually be the best move for the house – and Kors, a fitting partner.
At first glance, Michael Kors, an American affordable luxury designer known for glitzy, logo-drenched handbags, seems to many like a moneyed invader drafting off the “cool kids”—the Noah’s Arcade of Old World creativity. Kors’ upmarket ambitions are also well-documented: in 2017, the brand paid $1.2bn for British accessories maker Jimmy Choo in the middle of a year which saw its market value slide by over 20%. Kors stock has since doubled in price compared to last year’s lows.
Yet, despite Migos’ insistence, it's this association with cold hard profits that seems contrary to the very way Versace runs. Founded in 1978 by Gianni Versace, the Milan-based atelier built its name on boldness and creativity. Versace became a household name through provocative designs like a 1994 dress so shocking it has its own Wikipedia page. It's far from the branded predictability of a Michael Kors puffer.
This reliance on breakthrough hits means the house experiences more uncertainty than other luxury brands. Versace is the house of Medusa robes and Chain Reaction sneakers: Safe, reliable sellers like minimalist low-tops are simply off brand. Because of this, the company historically experiences boom-bust fashion cycles harder than most.
Herein lies the issue: As any creative will tell report, it’s difficult to do one’s best work stressed about something other than a deadline. “Keeping the factory lights on” certainly qualifies. Enter Kors.
Last year, Michael Kors Inc. reported gross profits of $2.66 billion. Despite the flagship brand’s “affordable” image, Kors—led by CEO John D. Idol—is full of savvy people who know how to run a fashion house. The company also has experience in the high-end arena with lines like Michael Kors Collection.
In short: Michael Kors understands the nuances required to keep luxury luxurious while walking the exclusive-inclusive tightrope that makes “mass” diffusion lines (like the ones Versace already has) desirable. Most importantly—they have money.
Kors resources could insulate Versace from creativity-disrupting finance issues while letting the house focus on making hits. But money marriages alone doesn’t make for great relationships. While anyone can throw cash at problems, Michael Kors–both the man and the brand–are actually a great match for Versace itself.
Despite founding his namesake line in 1981, Michael Kors rose to fame through his 10-season appearance on the hit show Project Runway. Kors’ larger-than-life persona (and hilarious snark) endeared him to millions. Arguably, it was the flamboyant force of personality he displayed on the reality competition—where he once called a contestant’s dress “like Toddlers and Tiaras gone berserk”—that catalyzed growth of Michael Kors, the brand. One year before leaving the show, his namesake business had gone public on the New York Stock Exchange, turning Kors into a billionaire overnight.
Versace’s success is similarly defined. Since her brother’s murder in 1997, Donatella Versace has led the brand through its ups-and-downs with a taste and inspiration best defined as “saucy.” The sex, the vibrance, the dream of Versace at present all flows from Donatella. It is a brand defined by its unafraid glitz and its creative director’s confident pursuit of glamour for glamour’s sake. In Donatella’s own words: “Fashion is all about happiness. It's fun. It's important. But it's not medicine.”
The similarities at each company’s top —that of charming, idiosyncratic creative geniuses who believe that sexy can’t be brought back because it never left—made a Kors-Versace deal spark well before this week’s news. To quote Kors CEO Idol’s reactions to a shared dinner between Michael and Donatella: “I’m in trouble. The two of them are the same.”
“Both built their brands on the theory of the abiding power of glamour,” comments New York Times fashion director Vanessa Friedman. “Though the Kors glamour has a certain wind-swept bronzed glow, and Versace’s is more gilded and trussed.”
Considering the landscape of American luxury, Kors is Versace. Compared to “office wear” Tory Burch, a Gucci-fied Coach, and Ralph Lauren’s American Dream, Michael Kors’ unapologetic belief that more is more seems straight from the land of Medusas.
Plus, Versace has been in an outside funding situation before (see: its 2014 BlackStone deal) that saw the house make, if anything, bolder moves (see: the hiring of former YEEZY footwear designer Salehe Bembury). Taking “big business” money didn’t dampen Versace’s creativity before. There’s no reason it should now.
In this context, Versace’s acquisition by Michael Kors may actually be the best move for the house going forwards. Kors' resources provide air cover for creativity. Kors' operations—both from the company and the man himself— turn hot-blooded fashion genius into global phenomena. There’s precedent for Medici-like “patron of the arts” relationships in luxury, a la Kering-Gucci or PVH-Calvin Klein. If anything, with their new financial insulation, Versace may be on deck for its next big breakout.
For another hyped Versace partnership, check out the label's collaboration with KITH.