Prada Cuts $1.4-B Deal To Buy Versace

Despite severe market turbulence that has sidelined deal-making across Wall Street—and looming tariffs threatening to disrupt the luxury fashion industry—Italian luxury conglomerate Prada has struck a $1.4 billion deal to acquire fellow Italian fashion house Versace from Capri Holdings, Sabrina Escobar and Janet H. Cho reported for Barron’s Daily.

The Versace deal is expected to close later this year.

Speculation about a deal had been swirling since last month. Capri acquired Versace for approximately $2.1 billion in 2018.

Recently, Capri shelved an aggressive turnaround plan, hoping instead to sell itself to Coach owner Tapestry. That deal fell apart after the Federal Trade Commission (FTC) sued to block it on antitrust grounds.

Without Versace, Capri can now focus on revitalizing its core Michael Kors brand, while Prada may use the acquisition to better compete with French luxury giants LVMH (Louis Vuitton Moët Hennessy) and Gucci-owner Kering. Prada also owns Miu Miu, Church’s, and several other fashion brands.

The Versace deal is expected to close later this year.

Capri’s Michael Kors brand, which contributes nearly 70% of its total revenue, has been struggling—sales dropped 9% in 2024. The company also recently announced the departure of CFO and COO Tom Edwards, who is set to take up similar roles at Macy’s in June.

While tariffs are expected to make importing premium European and Chinese goods more expensive, the bigger threat to luxury companies, according to Bernstein analyst Luca Solca, is that tariffs could trigger a global recession and market selloff.

Wealthy consumers may be more resilient to economic downturns but remain sensitive to investment losses.

Solca has downgraded his 2025 growth forecast for the luxury sector, now expecting a 2% contraction—down from a previously projected 5% gain. He also expects average earnings before interest and taxes across the sector to decline 4% to 6% from 2024 levels.