Last week, Michael Kors announced that they will be buying Versace for $2.12 billion. This will take place in early 2019. There has been so many mixed emotions about Michael Kors acquiring Versace. Some people think Michael Kors is a tacky designer, and isn't worthy of acquiring something so high end like Versace. A lot of people were complaining on twitter saying that Donatella shouldn't have sold her iconic brand to an American. I personally think Michael Kors buying Versace is a great thing for the future of Versace.
We see that Michael Kors stores are located anywhere and everywhere from a mall to an outlet, no matter the city. Versace stores are placed in specific wealthy areas. The prices of the two companies are completely different, and even though Versace products costs more, they don't do well financially, which is why they don't really post their financial results. Their operating costs are extremely high, and not enough people are buying their products, despite their efforts of trying to grow sales in many parts of the world.
Even though Michael Kors is seen as an "affordable luxury" brand, they do pretty well financially, and they actually have money on hand. To buy Versace, they're using some cash and the rest will be bank loans. Their revenue and operating costs arhttps://www.pexels.com/photo/five-people-standing-against-wall-1345082/e good. Michael Kors knows how to run a company efficiently and effectively. Whenever you look around, you probably see a lot of people with a Michael Kors bag, and that speaks volume.
I think the acquisition of Versace will grow Versace as a company. Their sales will increase, and we will see Versace stores in more normal places like non wealthy areas, and many malls and outlets. Michael Kors wants to diversify Versace's customer portfolio, and I'm sure they will achieve that by doing great marketing. I'm excited to see how the acquisition turns out!