Prada to Buy Rival Versace Amid Market Turmoil

Prada has agreed to buy the Versace fashion brand for €1.25bn ($1.38bn) from the fashion conglomerate Capri Holdings. This is being done amid market turmoil, as the retail industry has specifically been hit hard. According to Prada, the purchase will preserve Versace’s creative DNA and cultural authenticity while enabling the company to make use of the group’s well-established retail and manufacturing facilities.

“Versace has huge potential. The journey will be long and will require disciplined execution and patience,” added Andrea Guerra, the chief executive of Prada.

A Deal Between Two Rivals

The price Prada agreed to pay for Versace is significantly lower than the $2.15 billion that Capri Holdings spent when it acquired Versace in 2018. If it’s so low, why agree to sell it? Well, there wasn’t a choice.

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The market is deteriorating like almost never before. The deal has a lot of reasons behind it, particularly the fact that the brand’s debt is piling up as Versace has been operating at a loss amid a slowdown in demand for luxury fashion worldwide. The market upheaval in response to Trump’s tariffs is only worsening this situation. According to sources, the deal was originally supposed to be for €1.43bn, but a discount of about €180m was achieved because of trade uncertainty.

Prada Becoming a Multi-Million Dollar Luxury Group

The Prada Group already owns several other designer labels including Miu Miu and luxury footwear brand Church’s. Its acquisition of Versace will create a multi-billion dollar luxury fashion group, putting the brands in a position to compete with the likes of French luxury fashion conglomerates LVMH and Kering. This is not the first time the “made in Italy” brand has pulled such a strategic move. In 1999, it acquired Jil Sander and Helmut Lang and, in 2000, it added Alaia to its lineup.

While the market is in recession and the fashion industry is slowing down, it seems like Prada group is making the most of it. Rare and praiseworthy strategic success.

Prada reported revenues of €5.4bn in 2024, 17% higher than the previous year. This increase was partly driven by Miu Miu (the brand behind those viral micro-miniskirts and satin ballet shoes). This almost doubled Prada’s profits this year, hitting close to £1bn in sales.

Prada & Versace: Two Opposite Brands

Prada and Versace are often pitted against each other as Italian fashion rivals, and their designs are diametrically opposed. Versace champions the traditional tropes of femininity with unabashed enthusiasm – see high hemlines, high heels, big hair. If it’s seductive and wildly feminine; it’s most probably Versace.

Prada on the other hand is much more on the “intellectual” side. Miuccia Prada holds a doctorate in political science and has reflected that in the fashion pieces too. Modern chic and smart; basically Prada summed up.

However, the two women have a perhaps unlikely friendship. Speaking to The Telegraph in 2012, Versace said: “We just talk, talk, talk. She’s so inspiring. We make fun of each other and teach each other. She says, ‘I could never make sexy clothes, but I love them.’ And I say, ‘Well, I love what you do.’”

The Future Of Versace

Just recently, Donatella Versace stepped down from her creative director role at the luxury brand after nearly 30 years. Dario Vitale, who is a former design and image director of Miu Miu, took over as chief creative officer.

The switch of heads and the immense debt makes us worried about this iconic fashion brand. One can only hope that this decision by Prada to buy Versace will again revive the brand and bring it back to it’s very iconic position in the fashion world.