Versace on verge of sale to Michael Kors

An Italian newspaper reports that the Versace group is on the verge of announcing its sale to an American company for 2 billion euros ($2.4 billion).

The Versace store on Fifth Avenue in New York, March 25, 2016. [File photo:IC]

Corriere della Sera reported Monday, without citing sources, that the announcement could come as early as Tuesday. Bloomberg and Reuters news agencies later reported the buyer would be fashion group Michael Kors, which has been trying to burnish its image and last year bought high-end shoemaker Jimmy Choo for $1.35 billion.

Versace declined to comment on the reports. A spokesperson at Michael Kors couldn't be immediately reached for comment.

The reports come as Michael Kors has made it clear that it wants to transform itself into a house of luxury brands, starting last year with its acquisition of Jimmy Choo, made famous for its "Sex and the City" stilettos. The strategy follows moves by other fashion companies. Tapestry, formerly Coach, owns Stuart Weitzman and last year it acquired Kate Spade.

While Kors would be adding a major brand with international global status to its business, the Versace business still needs work, according to Neil Saunders, managing director of GlobalData Retail. And it comes as the Michael Kors business still hasn't been turned around, despite some progress made. The Kors brand struggled with a cheap image after it broadly distributed its products to department stores and outlet malls, which heavily discounted its goods. The company has been working to cut back on distribution and discounting.

"We believe that some of the work required on Versace, which includes toning down some of the brasher elements of the brand which are now out of step with the more subtle tone preferred by modern consumers, are precisely the issues with which Michael Kors has struggled and is yet to satisfactorily resolve," wrote Saunders in a report.

The Italian brand, which was founded by Gianni Versace and has been run by his heirs since his murder 21 years ago, had been eyeing a public listing for several years. The Versace family controls 80 percent of the company while Blackstone owns the remaining 20 percent. Donatella Versace holds 20 percent, her brother Santo 30 percent and Donatella's daughter Allegra 50 percent.

Donatella Versace is the brand's creative driver. She presented her latest collection for next spring and summer last Friday during Milan Fashion Week and was honored on Sunday by the Italian Fashion Chamber.