Potential Buyers Eye Versace and Jimmy Choo as Capri Holdings Contemplates Next Steps
Capri Holdings Ltd, the parent company of luxury brands Michael Kors, Versace, and Jimmy Choo, is reportedly exploring the sale of these latter two brands with the assistance of Barclays. The process is in its early stages, and it is still unclear whether the brands will be sold together, separately, or at all.
Financial sources have disclosed that a data room with confidential information on the businesses is currently being set up for potential buyers. Barclays is said to be interested in receiving initial expressions of interest before Christmas, suggesting that an auction-style process might be conducted where bidders could submit offers over several rounds.
The potential sale comes in the wake of Capri’s failed $8.5 billion acquisition by Tapestry Inc, which was blocked due to antitrust concerns. This has led to significant depreciation in Capri’s stock price, which dropped from $57 to $21.36.
Capri’s CEO, John Idol, indicated that the company had been considering strategic alternatives for these brands since as early as late 2022. The discussions included potential sales or even an initial public offering. Idol mentioned, “We’re a public company. 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.”
The strategic review followed a turbulent period marked by a softening demand in the luxury market, especially noted in China, and specific challenges for each brand. Versace, known for its bold luxury style, and Jimmy Choo, renowned for its high stilettos, both experienced revenue declines in the first half of 2024, with Versace revenues falling 22.1% and Jimmy Choo’s by just 0.6%.
Despite these challenges, Idol outlined plans to revitalize both brands. For Versace, the strategy involves “engaging and energizing both new and loyal consumers, broadening our product offering, improving store productivity and returning our wholesale business to growth,” aiming to re-introduce unique statement items that had been previously scaled back. Meanwhile, Jimmy Choo is expected to expand its casual offerings and adapt more swiftly to market trends.
While Michael Kors remains the largest and most pivotal brand within Capri Holdings, the potential divestiture of Versace and Jimmy Choo could provide the company with necessary resources to focus on turning around Michael Kors and enhancing overall shareholder value. However, as Idol acknowledges, not every planned deal reaches fruition, and the outcome for Versace and Jimmy Choo will likely depend on the interests and offers of potential buyers in the coming months.