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Prada's Versace deal revives hopes for 'Made in Italy'

champion

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Italy lacks rival to French giants, despite luxury prowess

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Deal marks strategic shift for Prada under CEO Andrea

Guerra

By Elisa Anzolin

MILAN, April 10 (Reuters) - Prada's deal to buy Versace

revives hopes for a 'Made in Italy' luxury champion after many

other family-founded brands ended up in French, Swiss or U.S.

hands, and comes as many Italian groups are outperforming the

struggling sector.

The $1.375 billion deal brings one of fashion's best-known

Italian labels back under Italian control after it was sold to

U.S-listed Capri Holdings ( CPRI ), then known as Michael Kors, for $2.15

billion including debt in 2018.

Despite Italy accounting for 50% to 55% of global personal

luxury goods production, according to consultancy Bain's

estimates, the country lacks a group with a scale that matches

up to French players such as LVMH and Gucci-owner

Kering.

Milan-based Prada, controlled by designer Miuccia

Prada and husband Patrizio Bertelli and listed in Hong Kong with

a market capitalisation of about 14 billion euros ($15 billion),

is the largest Italian luxury fashion group by revenue.

But the group, which also includes the fast-growing Miu Miu

label, has been a relative minnow in terms of stock market

valuation compared with the likes of Louis Vuitton-owner LVMH.

The Versace deal comes after Andrea Guerra became Prada's

CEO in 2023 to bridge a change in generation, with Lorenzo

Bertelli, the son of the company's main owners and its chief

marketing officer, regarded as the heir apparent.

"Prada's ambition to become a leading Italian luxury

conglomerate is a significant move in a market that is dominated

by French groups. It's exactly what many Italians have been

hoping for", said Achim Berg, a fashion and luxury industry

adviser.

The combined revenue of the five biggest Italian-owned

listed luxury groups - Prada, Moncler, Ermenegildo

Zegna ( ZGN ), Brunello Cucinelli and Ferragamo

- is still well below Kering's roughly 17 billion

euros, even after a big fall in sales at the French group last

year.

Company founder Brunello Cucinelli summed up the difference

in approach on the two sides of the Alps in typically colourful

fashion.

"Our esteemed French counterparts are great financiers," he

told the Milano Fashion Global Summit 2024 last October.

"But we Italians regard our 'tiny big' companies as if they

were our little children, so we want to look after them and hand

them down to a next generation," he added.

AMBITIOUS MOVE

While LVMH and Kering have swallowed many Italian brands,

even the larger Italian groups have until now been comparatively

reluctant to make big acquisitions.

"This acquisition represents Prada's serious attempt to

build a group - and a much more ambitious one compared to their

past ventures with Helmut Lang and Jil Sander," Berg said.

Prada's chairman and co-owner Patrizio Bertelli defined the

acquisition of those two brands - which were bought at the turn

of the century and sold a few years later - as "strategic

mistakes". The group has since focused mainly on organic growth,

with the exception of acquisitions of suppliers.

Both Prada and Versace have their roots in Milan and still

have headquarters there, just four kilometres (2.5 miles) apart.

Milan-based Moncler, the mountain gear brand that was bought

and revived by Italian entrepreneur and current main shareholder

Remo Ruffini in 2003, has also shown some interest in

dealmaking, buying Italian streetwear brand Stone Island in a

1.15-billion-euro deal agreed in late 2020.

Moncler's net cash position of 1.3 billion euros has fuelled

analyst talk of more deals, but the group has denied such

speculation.

Jil Sander is now part of Italian entrepreneur Renzo Rosso's

OTB Group, which also includes brands such as Diesel and Maison

Margiela. But with annual sales of 1.7 billion euros, it remains

relatively small.

The big Paris-based groups, meanwhile, have continued to

make forays into Italy, underscoring the challenge an enlarged

Prada would face to compete with them.

In the latest deals, Kering bought a 30% stake in Italian

maison Valentino in 2023, and LVMH last year helped to take

Tod's private and took a 10% stake in Moncler's top shareholder.

In the longer-term, eyes are on companies such as

Milan-based Armani and Dolce & Gabbana, among the few in Italy

that are still fully family-owned and unlisted.

Their ultimate fates could be decisive in any effort to

create a true Italian powerhouse in global fashion.

($1 = 0.9152 euros)