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Vying For Versace

Michael Kors is going where no American fashion designer has ever gone before. His company, which owns a an affordable luxury brand called Michael as well as the flagship, namesake, mid-level Michael Kors brand is making a bid for Italian luxury brand Versace. If the deal goes through, this would be the first serious attempt by an American fashion brand to run a luxury European brand, and will be the next step in transforming the company into a global luxury fashion group.

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After digesting the fairly recent acquisition of Jimmy Choo, marketers have been hungry for a slightly higher end brand to round out their appeal to multiple income groups. Offering a family of different brands to different income demographics is just good marketing, and Versace appeals to a very high end market. The $2 billion acquisition would also provide the company, which will be renamed Capri Holdings, with a much larger foothold in many international markets. And shareholders want growth, which Michael Kors has struggled to provide in its current markets. A market development strategy seems very appropriate here, and the fashion industry will be better for it if the proposed merger results in a larger, healthier company.

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