
Versace would widen Prada's reach but fixes could hit short-term profits
Prada is seeking to expand after posting strong organic sales growth in the last nine months of 2024 despite a slowdown in demand, while Versace operates at a loss. A merger would be Italy's answer to the French conglomerates that dominate the luxury business.
«The (Versace) brand needs restructuring and has a history of mismanagement with no easy fix,» said Melania Grippo, analyst at BNP Paribas, in a note on Monday.
However, acquiring such a famous brand as Versace would accelerate growth, said Mario Ortelli, managing partner at luxury advisory firm Ortelli & Co.
«Scale matters,» he said, pointing out that Prada, with a market capitalisation of $22.5 billion, is a fraction of the size of French giants LVMH and Kering.
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