Bankers and would-be buyers are buzzing about what comes next for Versace and Jimmy Choo — and where they land next year.
Financial sources told WWD that Capri Holdings, which owns both brands, is working with Barclays to try to find buyers for the businesses.
Neither Capri nor Barclays responded to requests for comment Friday.
The process is just beginning and it’s not clear whether the brands would be sold together or separately — or at all. A data room with confidential information on the businesses is being set up now for potential buyers. One source said Barclays suggested that it would like to start receiving indications of interest before Christmas.
While a buyer could swoop in and cut a deal, it’s possible that Barclays ends up running an auction process that would see dealmakers putting in offers over multiple rounds. Typically, bidders would first have access to data on the brands to make initial bids and then access to management as they refine their offers.
The sale process is not exactly a surprise.
Capri was widely seen as considering its options for both brands since the company’s $8.5 billion buyout by Tapestry Inc. was dropped following an antitrust challenge from the government. While Tapestry agreed to pay $57 a share for the company, Capri’s stock has lost significant value and closed down 1.2 percent to $21.36 on Friday.
Michael Kors is by far the company’s biggest business and is in need of a turnaround. Selling off the other divisions would give Capri time and resources to continue that effort.
Capri has at least toyed with the idea of spinning off the divisions before.
In late 2022, Capri’s board met with Barclays bankers and “reviewed certain potential strategic alternatives.” They included a sale of all of Capri, an initial public offering of equity interests in Versace and Jimmy Choo as well as the sale of the two luxury brands.
At the time, the bankers said there were only a “limited number” of buyers for Capri and that there would “less strategic interest in acquiring” Versace and Jimmy Choo together.
Once the negotiations started with Tapestry, Capri continued to play the field with John Idol, chairman and chief executive officer, meeting with potential suitors. According to regulatory documents, one was with the “chairman and chief executive officer of a multi-industry holding company” who discussed the possibility of buying both Versace and Jimmy Choo or investing in any IPO. Another was “the chairman and chief executive officer of an international luxury goods company,” who wanted to circle back to “prior conversations” about buying both brands.
Those options were all dropped when Capri moved forward with Tapestry.
After that deal fell through last month, those prior talks might have been given new life.
Idol laid out his plans for the fashion group in an analyst call last month and was asked about seeking strategic alternatives for Versace and Jimmy Choo.
“We’re a public company,” Idol said. “We have always been open to conversations with any company that has an interest in any of our assets, as we would always do and always have done.
“Our first commitment is to rebuild all three of these houses to get them on a growth trajectory and to create value for our shareholders through revenue growth, through operating margin growth and ultimately through net income growth,” he said.
Although Michael Kors is the big focus, Idol also sketched out the path ahead for Versace.
There’s work to do on both brands, which have been hit by softening luxury demand and a particular slowdown in China.
Each business also had their own idiosyncratic headwinds.
Versace is known for a kind of loud luxury that could be coming back into fashion, but didn’t fit with the quiet luxury trend. And Jimmy Choo, with for its sky-high stilettos, has seen the occasion business slow after the post-COVID-19 bounce back.
Vivienne Rohner for Jimmy Choo.
Courtesy of Jimmy Choo / Stas Komarovski
Versace’s first-half revenues fell 22.1 percent to $420 million, while Jimmy Choo held up better, with revenues down just 0.6 percent to $313 million.
Idol called Versace “one of the world’s most storied luxury houses with a 46-year heritage” and said it could bounce back by “engaging and energizing both new and loyal consumers, broadening our product offering, improving store productivity and returning our wholesale business to growth.”
“We believe we removed too many unique Versace statement items, which resulted in a less exciting brand and product identity,” the CEO said. “We also significantly reduced our offering of products for aspirational consumers as we tried to elevate the brand.”
Going forward, Versace plans to balance fun and elegance while better courting the aspirational luxury shopper.
At Jimmy Choo, Idol said the business has been expanding its casual offering and would now “respond more quickly to this shift in trend.” (Jimmy Choo could have some competition from Tapestry’s Stuart Weitzman brand, which sources say is still being shopped around).
At least that’s the direction Capri has set out for the two brands. Whether they ultimately get there might well depend on the next owner.
Then again, as Idol knows only too well, not every deal that is planned is ultimately completed.
