Paris | It’s official: America has its first global luxury group. Michael Kors’ purchase this week of the Italian brand Versace for $US2.1 billion vaults the company – to be renamed Capri Holdings, after the Italian island – into the ranks of fashion conglomerates, a rarefied world defined by Kering and LVMH Möet Hennessy Louis Vuitton.
Everyone is chattering about what the deal might or might not do for growth, for taking advantage of the Asian market, for backroom synergies and so forth. In his announcement on Wednesday (AEST), John D. Idol, chief executive of Kors, called it a “milestone”.
He was right, and not just in terms of Kors but in terms of the fashion and luxury industry itself.
There are implications that go beyond the purely financial to the root of luxury identity and the international fashion world. And they have the potential to be as disruptive, and formative, as any revenue stream. They speak to national pride, and to luxury’s sense of its own history.
And that is why, even as analysts muse over the stock price implications, consumers have taken to Donatella Versace’s Instagram feed to voice their fears and horror about what it could mean, with comments such as: “donatella, why would you sell versace? it’s an iconic ITALIAN brand. i’m a proud italian, why would you sell it to an american brand?”
More than many other global industries, luxury fashion has made national identity part of its calling card. “Made in Italy” and “Made in France” are part of its value proposition. Every industry has its own creation myth, after all. Luxury’s is rooted in the ateliers of Europe, where couture and craft are regarded as part of the patrimony.
It’s one of the reasons, during the post-recession wave of consolidation, that there was a lot of soul searching and hand wringing in Italy about heritage brands being bought by the French.
In this narrative, American fashion is even more of an upstart and a wannabe. This is the country, in industry lore, that once upon a time sent department store employees to spy on the couture shows so retail emporiums could make copies of the clothes. It is the birthplace of sportswear. It is a country where every generation gets to start anew and find its own bliss instead of being burdened with tradition.
For years, when New York Fashion Week was the last of the New York-London-Milan-Paris circuit, it was routinely dismissed as a mere imitation of the trends that came out of Europe. Even when it jumped to the front of the queue in 1998 and proved this wrong, it suffered from the taint of commercialism. When American designers needed to bolster their creative credentials, they often felt the need to make their mark in Paris. As recently as last year, the designers Proenza Schouler and Rodarte left their base in New York to show in France; they have since returned.
Neither loyalty nor longevity assuaged. Marc Jacobs’ 16 years as creative director of Louis Vuitton and the stint Michael Kors himself did at Celine didn’t serve to legitimise American fashion.
Whenever the question of why the United States didn’t have its own luxury group – or why a few such attempts have failed – came up, part of the answer might have been financial. But mostly it was abstract: America simply wasn’t a culture of historic brands or haute handwork.
There was a gulf, it was said, in understanding.
The Kors-Versace deal challenges all that.
Even if Idol, in an interview from Milan, said Kors was “an international corporation, not an American one or a European one or an Asian one” with, in fact, its “principal executive office in London”, to most people Kors is by definition American.
Its eponymous founder was, after all, a star for many seasons on Project Runway. Kors the brand is cast in the image of Kors the man: a dreamer from Long Island, selling an idea about how to dress while reclining on butter-soft leather seats in a private jet from the Hamptons to Aspen. And now that aspirant – who last year acquired the British accessories house Jimmy Choo – is swallowing up one of the last of the independent Italian houses, known for its baroque decadence and pop culture presence.
Among the rumours around the acquisition, there was talk that Kering had considered Versace and dismissed it as overvalued, an aside that implies Kors was something of a sucker for a storied Italian name. Other rumours were that family was looking to get out, and that Versace would be Americanised within a few years.
And yet on the call this week, Idol categorically rejected any suggestion that Donatella Versace would leave the brand after a face-saving amount of time had elapsed, or that another designer would be brought in. She, in turn, reiterated that Versace was and would remain “made in Italy”.
Idol insisted he saw numerous unexpected parallels between the two companies, not just in growth opportunities and digital invention, but in personality.
Idol said that when he first met Versace, only a few months ago, he knew “instantly” that he wanted to work with her. The evening before the agreement was announced, he added, he had dinner with both Kors, who was not involved in the deal but knew it was happening, and Versace. His thought: “I’m in trouble. The two of them are the same.”
Both share a sense of humour, a vision for the people in their companies and a belief in optimism on the runway, he said. It is true that theirs is not the aesthetic of bleak existential angst and stringy black but rather glossy manes and sparkling sequins. Both built their brands on the theory of the abiding power of glamour – though the Kors glamour has a certain wind-swept bronzed glow, and Versace’s is more gilded and trussed. Both are also fond of poking fun at their own public caricatures.
All of which is to say that if Idol is right and the deal works – if the projections he has made prove true and Versace does reach $US2 billion in sales over the next few years, Choo $US1 billion and Kors $US5 billion – it could rebalance not just the group’s portfolio but smash some long-standing conventions within the industry itself.