MW Capri may sell struggling Versace to Prada. That's boosting Capri's stock.

By Ciara Linnane

Deal would return Versace to Italian ownership after it was acquired by Michael Kors in 2018

Capri Holdings Ltd.'s stock soared 7.8% early Monday, after a report that the company is close to selling its Versace brand to Italian fashion company Prada SpA in a deal valued at 1.5 billion euros.

The Italian family-owned Prada (PRDSY) has agreed to that price, Bloomberg reported, citing people familiar with the matter. Versace was founded by the late Gianni Versace in 1878 and is currently run by his sister Donatella.

Capri $(CPRI.UK)$, which is also home to the Michael Kors and Jimmy Choo brands, has been struggling to boost sales amid weak demand for Michael Kors bags and accessories. In February, the company predicted a shortfall next fiscal year with a rebound to follow.

A planned $8.5 billion takeover by Tapestry Inc. (TPR), parent to Coach and Kate Spade, fell through in November, after a federal judge blocked the deal on the grounds it would hurt competition in the luxury-handbag industry.

Tapestry said last month it would sell a third brand, Stuart Weitzman, to Caleres Inc. $(CAL)$ for $105 million in cash.

Milan-based Prada was founded in 1913 by Mario Prada and is run today by his granddaughter, Miuccia Prada. The company has completed initial due diligence on Versace and has been granted access to its financial and sales figures, according to Bloomberg.

Michael Kors acquired Versace in 2018 for $2.1 billion but has struggled with the brand in recent years.

Versace chalked up revenue of $193 million in the last quarter of 2024, down 15% from the year-earlier period. Chief Executive John Idol said the company made a number of missteps in trying to reposition the brands, raising prices by cutting back on statement items and reducing lower-priced items.

The company tried to focus on more sophisticated pieces and the artistry involved in creating them, but the plan backfired as shoppers stayed away, as the Wall Street Journal reported last month.

Idol said the Versace brand still resonates with shoppers, and that its eyewear and fragrance businesses continue to perform well.

But S&P Global Ratings lowered Capri's credit to junk status in February, dropping it to BB from BBB-minus, citing performance pressures and high leverage.

The stock has fallen 52% in the last 12 months, while the S&P 500 SPX has gained 15.9%.

-Ciara Linnane

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March 03, 2025 08:57 ET (13:57 GMT)

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