By Anthony Marcus for Eurasia Business News, April 10, 2025. Article no.1481.
The Italian fashion house Prada Group announced that it has reached an agreement with the American company Capri Holdings to buy the Italian manufacturer of premium clothing and accessories Versace from it. Prada Group will pay €1.25 billion for 100% ownership of Versace.
Experts note that the deal is taking place amid global market instability caused by Donald Trump’s tariff policy. They fear that a general slowdown in the world economy and consumer activity could harm the recovery of the global luxury goods market, which has just begun at the end of last year and the beginning of this year.
The Prada Group’s interest in buying its competitor in the luxury goods market became known in January. At the same time, it was reported that the owner of Versace, the American holding Capri Holdings, hired consultants for this and contacted several potential buyers.
In 2023, Capri Holdings agreed to merge with another holding company specializing in luxury goods, Tapestry. However, in October last year, a Ucourt blocked the deal, considering that it would harm the interests of buyers and employees of companies. After that, Capri stated that it did not rule out the possibility of selling individual brands.
To finance the deal, Prada Group will issue €1.5 billion in debt, the terms of the deal have already received approval from the boards of directors of Prada and Capri Holdings. If the deal is approved by regulators, it should be completed in the second half of this year.
The deal could help Prada strengthen its competitive position with luxury giants such as LVMH and Kering SA. For Versace, this will be a chance for revival and a new stage of development under the leadership of the Italian fashion group.
The deal between Prada and Versace comes amid increased market volatility due to Donald Trump’s tariff policy. The U.S. is one of the largest markets for luxury goods, including European brands. According to Bernstein investment bank, the US market accounts for European luxury brands from 15% to 30% of total sales.
As you know, earlier for goods from the EU, Donald Trump raised import duties by 20%. This should affect, among other things, prices for American consumers and, as a result, the overall sales of European luxury brands.
Experts note that even if import duties are not directly imposed on the goods of European luxury manufacturers for some reason (postponement of tariffs, bilateral agreements, temporary exceptions, and so on), they are likely to suffer from a general decline in consumer activity. “Stock market crashes and general economic uncertainty have a negative impact on consumer confidence.
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Especially unfortunate for luxury brands is that tariff war launched by the U.S. President Donald Trump could undo the recovery of the global premium goods market, which only began at the end of last year.
According to estimates by Bain & Company and Fondazione Altagamma, after a rapid rise in the post-pandemic years, the global luxury goods market in 2024 decreased by 1% to €1.48 trillion. This small decline at current exchange rates represents a normalization after the robust growth observed in both 2022 and 2023, although the longer-term historical trend remains positive, with performance in 2024 still exceeding pre-Covid levels.
The main reasons for the decline in costs last year, experts cite general macroeconomic and geopolitical uncertainty, a slowdown in the Chinese economy, as well as the continued rise in prices for goods of many premium brands.
At the beginning of 2025, it became obvious that due to the drop in sales in China, many manufacturers of premium goods were reorienting themselves to the markets of other Asian countries. In this regard, Bain & Company and Fondazione Altagamma expected that in 2025 the growth of the personal luxury goods segment would be up to 4%, and until 2030, analysts predicted the growth of the personal luxury goods market by an average of 4-6% per year.
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© Copyright 2025 – Eurasia Business News. Article no. 1481.
Eurasia Business News 