The luxury slowdown has greatly affected everyone from independent brands to giant conglomerates. However, one group is managing to not only keep its head above water, but thrive in this new ecosystem. On April 10, Prada Group purchased Versace from Capri Holdings for $1.4 billion USD. They negotiated a $200 million discount on account of the Trump administration trade war, and are financing the transaction with new debt, borrowing an additional $250 million to invest in Versace.
A few days after the Versace acquisition, LVMH temporarily lost their spot as the top performing luxury group on the stock market for the first time in history to Hermés. Although they were back to number one by the next business day, this short dethroning proves what many once thought was impossible: an independent brand can go up against an ironclad conglomerate and win, even if only for a moment in time. While these two events seem to only be loosely related, they are harbingers of what could potentially be on the horizon. What does the future of luxury entail, for 2025 and beyond? We are living in unprecedented times, and a lack of precedence calls for an outpour of innovation. Creative problem solving, new ways of thinking, even new ways of doing business are all being considered. It’s survival of the fittest, but the fittest may not be who we anticipate them to be.
After the FTC blocked the Tapestry-Capri merger in the fall of 2024, Capri’s original plans to reinvigorate Michael Kors were left without financing. Strapped for cash, Capri chose to part with one of their most iconic brands that they acquired in 2018 for $2.1 billion, Versace. The news of the sale created massive buzz in the fashion industry. Where would this cultural icon, the house behind the look that sparked Google Images, the legacy of Gianni Versace, make its home?
When word got out that Prada was in talks to purchase Versace, reactions were mixed, albeit mostly positive. This is not the first time by any means that Prada has acquired other brands in an attempt to stand up to larger conglomerates; in the 90s, they acquired Jil Sander, Helmut Lang, and a majority stake in Fendi, however, these acquisitions fell through in the wake of 9/11. This time around, the Italian edge just may be the missing puzzle piece. Some look at the purchase as a risk, Versace’s estimated revenues fell 19% to $810 million in the fiscal year through March, according to Capri. However, Prada believes that with their negotiated discount, financing, and Dario Vitale’s artistic expertise at the helm of Versace, they can create a new, spectacular, vision for the brand.
The future of luxury is currently bleak, with LVMH and Kering both reporting drops in sales and the latter closing stores across the globe. While it is no secret that the coming years in fashion will create great upheaval, many are wondering what and who will be left standing on the other side of the economic crisis. Independent brands and smaller, hyper-focused conglomerates, like Hermés and Prada Group, have the opportunity to take center stage and offer something that the bloated fashion giants can’t: refined stories, distinctive personal branding, and direct sentimentality. When we look to the future of the fashion economy, we may see a return to that element of raw emotion in fashion week, in stores, and across the Internet. Because although the stakes have never been higher, the passion for creation has also never burned brighter.
Words by Lola Barajas
Graphic by Aubrey Lauer