Inside Prada's Audacious Attempt to Win Italian Domination

With the daring EUR 1.25 billion acquisition of Versace, Prada further solidifies its hold on the Italian fashion scene and signals a purposeful consolidation of power within the region's premium market.

Prada has announced that it will buy Versace from Capri Holdings for USD 1.375 billion (about EUR 1.25 billion), bringing together two of Italy's most prestigious luxury fashion brands in a daring attempt to challenge the supremacy of French fashion titans. The dynamics between international luxury corporations may be redefined as a result of this strategic takeover, which marks a profound change in the luxury apparel industry. In a statement confirming the news, Prada’s group chair and executive director Patrizio Bertelli said the group was “ready and well positioned to write a new page in Versace’s history”. Both businesses "share a strong commitment to creativity, craftsmanship, and heritage," Bertelli continued.

Versace Reborn

Dario Vitale will take over as Versace's CEO on April 1, 2025, following Donatella Versace's resignation after 27 years in that position. Her resignation and appointment as Versace's top brand ambassador, together with the fact that the former Miu Miu design director would be replacing her, suggested that the sale was already impending. The change was managed by Versace's parent company, Capri Holdings, and it was the first time in 47 years that neither Donatella nor the late Gianni Versace would design a collection.

In an emotional Instagram post after the news was announced, Donatella said, "I hope I've made you proud so far." This was clearly a tribute to her late brother Gianni Versace, who started the company in 1978. "It has always been important to me to support the next generation of designers," Donatella continued. I'm pleased to experience Versace from a different perspective and am overjoyed that Dario Vitale will be joining us. I would like to express my gratitude to my amazing design team and all of the Versace staff with whom I have had the honor of working for more than thirty years. The greatest honor of my life has been continuing my brother Gianni's legacy.

Tapestry’s Loss Is Prada’s Gain

Legal concerns interrupted early talks of a planned merger between Tapestry and Capri Holdings. In April 2024, the Federal Trade Commission filed a lawsuit to prevent the agreement, arguing that combining mid-market leather prices could create an unfair monopoly that restricts customer choice. According to the FTC, a merger between Tapestry and Capri Holdings would combine six brands, including Coach and Michael Kors, into one business, possibly creating a monopoly in the market for leather bags and accessories. This would undoubtedly lessen competition and leave customers with fewer reasonably priced options.Since a lack of competition frequently results in complacency among market leaders, the complaint raises concerns that such consolidation could hinder innovation and boost prices. The transaction would also give Tapestry a significant portion of the "accessible luxury" handbag industry, with the company holding more than half of it after the deal is finalized, according to Reuters.

With Prada's modernist minimalism and Versace's extravagant, baroque-inspired style now combining, the merger may create a new Italian powerhouse that can rival LVMH and Kering on an equal footing.Although Versace has experienced its fair share of recent economic ups and downs, Prada's tenacity in the face of luxury's "slowing" demand lends significant weight to this partnership.Retail sales of Miu Miu increased by 93% year over year to reach almost USD 573 million in the first half of 2024, which greatly aided the Prada Group's overall net revenue growth of 17% during this time.This outstanding success highlights the brand's rising appeal, especially in the Asian market and among Gen Z consumers. The brand and Jimmy Choo were first listed on the market in December 2024 by Capri Holdings, a company with a history of financial difficulties, after a proposed USD 8.5 billion merger with Tapestry fell through.

Do Not Be Fooled By Trump’s Turbulent Tariffs

In an industry where other dominant firms are walking gingerly, Prada's acquisition of Versace shows confidence and long-term vision at a time of tumultuous tariffs and impending fears of a worldwide recession. This acquisition represents a significant advancement for Italian design and is as much a corporate transaction as it is a cultural unification.The most recent tariffs imposed by the Trump administration may change the luxury apparel market by raising prices and influencing consumer behavior.President Trump's new tariffs impose a base levy of 10 percent on all imports, with higher rates for certain nations — up to 54 percent on goods from China, 46 percent on goods from Vietnam, and 25 percent on goods from Italy, according to reports from boinclo.co.uk.Luxury brands that depend on foreign manufacturing and materials may see a large increase in production costs as a result of these hikes. As a result, brands such as Gucci, Prada, and Balenciaga are being forced to decide whether to reduce their collections or postpone their debuts in the US market.Presumably, this would allow Prada to concentrate on the Asian market, where it already has a significant presence.According to The Guardian, corporate strategy have also been harmed by the uncertainty created by the tariffs. The story claims that market instability brought on by trade tensions had an impact on Prada's EUR 1.25 billion acquisition of Versace.These economic concerns resulted in a downward adjustment of the deal's valuation from earlier forecasts.

The purchase would enable Prada to capitalize on Versace's robust presence in North America, where Prada has historically had a more muted presence, as WIX reported in January.This offers quick chances for expansion and market share in the area. About 34% of luxury sales worldwide in 2024 came from North America, according to Bain & Company. Prada's position in the market may be considerably strengthened by this acquisition.

The Strategy Behind the Shake-up

The business has mostly avoided big acquisitions since the late 1990s, when Prada bought Helmut Lang and Jil Sander, deals that important stakeholder Patrizio Bertelli later called "strategic mistakes." The recent acquisition of Versace marks a substantial shift from that historically cautious strategy. It also comes after the change in leadership two years ago, when Andrea Guerra succeeded Bertelli and Miuccia Prada as CEO. The change also emphasizes the growing popularity of their son, Lorenzo Bertelli, who is generally considered to be the organization's future CEO.

The history of Prada began in Milan in 1913 when Miuccia Prada's family established a leather goods store. Prada, Miu Miu, Church's, Car Shoe, Marchesi 1824, and Luna Rossa are currently owned by the Prada Group. Prada appears to be doing well already.According to the Lyst Index, Miu Miu and Prada were the most popular fashion labels in 2024. The Prada group's revenues increased by 16 percent during a period when the luxury fashion industry was going through several sales slumps. This was due to a spike in Miu Miu sales as well as the company's ongoing expansion in Asia, which saw a boost in sales from China and Japan. In addition, Miu Miu experienced a stunning 89 percent increase in that year, which followed a 58 percent increase in 2023.

This triumph occurred at a period that saw the premium market slow considerably for other luxury firms and Prada’s competitors. So rather than cruising on a continuous high, why take the chance now? It all boils down to balancing the benefits and hazards. LUXUO correctly pointed out that the Kering Group's four percent rate decline last year was not an immediate cause for concern because the company was focusing on long-term objectives rather than immediate profits.

The Kering Group announced in July 2023 that it has made an acquisition bid for Valentino, paying USD 1.83 billion in cash for a 30% share in the Italian Maison. By 2028, Kering will have the opportunity to purchase all of Valentino's shares under the terms of the deal. The transaction is part of a broader strategic partnership between Kering and Mayhoola, which could lead to Mayhoola becoming a shareholder in Kering.

As a result, in typical market form, what falls down often comes back stronger. Prada plans to remain at the forefront when the dust settles. With its refocused attention, refreshed creative leadership, and strategic acquisition, the Prada Group is not only getting ready for a resurgence, but also setting the stage for domination in the future of luxury when things improve.

Viva Italia

Recall how Bernard Arnault, the CEO of LVMH, made news in June 2023 when he struck a historic deal to sponsor the 2024 Summer Olympics, a calculated move valued at USD 166 million (about EUR 150 million). The goal? to take advantage of sports' widespread popularity and link luxury with athletic status. The collaboration would "contribute to heightening the appeal of France around the world," as Arnault stated.

Now that the Olympics are over, Prada is practically navigating comparable waters with its long-standing collaboration with Luna Rossa Prada Pirelli, the Italian squad that is participating in the 37th America's Cup. The Luna Rossa project is more than just a sports partnership; it is a wonderful example of Prada's dedication to excellence and cultural pride.For the third time, the crew is representing Circolo della Vela Sicilia, combining Italian heritage with cutting-edge technology—values that are equally as potent in couture as they are on the wide ocean. Prada's participation in professional sailing is more than just a brand extension; it is a deliberate reflection of performance and national identity in a world where luxury companies are increasingly looking to sport for relevance.

With American markets in crisis and French conglomerates recalibrating their growth strategies alongside multiple CEO reshuffles, Italy could quietly be putting itself at the forefront of luxury’s next great cultural and competitive resurgence.