Donatella Versace and John Idol in 2018.Credit: AP
“It’s not been the turnaround story that they wanted it to be,” Sherman said in an interview. “The strategies haven’t been the right strategies.”
Compounding the problem, Versace hiked prices and reduced the amount of affordable items it sold. “We went too far, too fast,” Idol said in February. “Customers who used to shop with us came in and said, ‘I like that, but I can’t afford all of that,’” Idol said. “Probably the customers are sitting there saying, ‘Wait a minute. What happened to the old Versace?’”
Now, Versace is scrambling to undo the damage. The brand is lowering price points on some core items: In the fall, silk shirts will start at $US990 instead of around $US1,500, the company told Bloomberg News, and its sneakers have become more affordable. Its Galaxia style, for example, starts at $US550.
The brand also reduced discounts. While end-of-season sales on apparel and footwear still start at 50 per cent, the second markdown is now 60 per cent, the company said, versus 70 per cent in the past. And Versace stopped putting handbags on sale at its full-price boutiques.
The shift “is painful,” Idol said, “but it is the right thing to do.”
In March, the company announced that Donatella Versace was stepping down as chief creative officer, a role she’s held since 1997. She’s become chief brand ambassador and supports the company’s philanthropic efforts. Former Miu Miu executive Dario Vitale succeeded her on April 1.
“We are confident that his talent and vision will be instrumental to Versace’s future growth,” Idol said about Vitale in a statement.
Capri’s Chief Financial Officer Thomas J. Edwards left in April for the role of CFO and chief operating officer at Macy’s Inc. “His departure comes at a precarious time,” Telsey Advisory Group analyst Dana Telsey wrote in a research note. “Leadership transitions always carry an element of risk.”
Risks have increased further, and Capri’s shares have fallen further since President Donald Trump pledged to implement sweeping tariffs.
Pyrrhic victory
The sale of Versace to Prada is a Pyrrhic victory for Idol, who has led Capri since 2003. Wall Street cheered when Idol appeared to have found a potential buyer for Versace: Capri shares rose on March 3 after Bloomberg News reported on the deal talks.
Versace’s future now rests with Prada, a company that’s nimbly navigated the recent slowdown in luxury spending.Credit: Bloomberg
But Idol’s plan wasn’t to split Capri into pieces. He aimed to sell the whole company to Tapestry Inc., which owns Coach and Kate Spade, for $US8.5 billion in 2023. That would have afforded Idol a grand exit after decades at the helm of Capri. What could have been a crowning achievement, though, was toppled last year when a federal judge ruled the combination of the rival conglomerates would harm competition in the US handbag market.
Idol, 66, had already tried to take steps to ease out of his day-to-day CEO role in 2021. Capri’s board appointed Joshua Schulman to lead the company so Idol could move on to become executive chairman. Several months later, in an unexplained and surprising about-face, Capri said Schulman was leaving the company and Idol would remain CEO and chairman.
While the battle over Tapestry’s acquisition of Capri was playing out in the courts, Idol and his team didn’t appear to be drawing up a Plan B for their remaining brands.
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“The company used the excuse of the deal with Tapestry for its inertia,” GlobalData analyst Neil Saunders wrote in a research note in February. “That excuse is no longer viable, and the company needs to do the heavy lifting of reinvention.”
Bloomberg
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