After merger deal dropped, Capri mulls sale of Jimmy Choo, Versace

Capri might be selling both the Jimmy Choo and Versace brands, leaving only Michael Kors under its umbrella, after its proposed merger with Tapestry ended last month.

Sources told WWD that the company was working with Barclays to find buyers for the two labels. It remains unclear whether the two brands would be sold together or separately, and the format of the sale is also undetermined.

Capri and Tapestry terminated their $8.5 billion merger last month after it was blocked by the Federal Trade Commission over competition concerns. The two companies first announced the proposed deal last year.

In a statement, Capri said its next move was to implement several strategic initiatives to return its luxury houses to growth. These include reducing Michael Kors’ store count to about 650 over time, while Versace and Jimmy Choo’s fleets remain with 230 and 220 locations respectively.

GlobalData MD Neil Saunders described the termination of the merger as a “lucky escape” for Tapestry amid concerns it could be overpaying at the time it made the offer.

Capri has been struggling with accelerating declines over the past year. In its latest financial report, the company saw a 16.4 per cent drop in sales for the second quarter.

During the quarter, Versace reported the biggest sales slump (down 28.2 per cent), followed by Michael Kors (down 16 per cent). Meanwhile, Jimmy Choo’s sales picked up a little thanks to better wholesale revenue.

While the overall luxury market remains soft, Saunders believed many of the problems lie within the company.

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