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Versace Merges Diffusion Lines

The Italian luxury brand will fold Versus into its Versace Jeans label, phasing out Versace Collection.
Versus Versace Autumn/Winter 2018 campaign | Source: Versus Versace
By
  • Tamison O'Connor

MILAN, Italy — Hot on the heels of its sale to Michael Kors, Versace is merging two of its contemporary lines, folding Versus into its Versace Jeans label, and phasing out Versace Collection.

Versace Jeans is licensed to Swinger International, a Verona-based group whose portfolio contains Genny and Cavalli Class. Swinger International did not respond to a request for comment.

Donatella Versace will creatively head up the brand, and a refreshed Versace Jeans is expected to debut in November.

"Over the past few months, we have been looking at ways as to how we can simplify our business model and enable us to give a better focus and energy into our brand portfolio," Versace chief executive Jonathan Akeroyd said in a statement.

The news was first reported by Women's Wear Daily.

The news comes one month after Michael Kors Holdings — since renamed Capri Holdings — announced it would be buying the Italian fashion house for $2.1 billion. The deal is expected to close in the fourth quarter of 2019. At the time, Capri outlined plans to turn Versace into a brand with $2 billion in annual revenue and 300 stores worldwide by 2023.

The move is part of a wider industry trend of brand consolidation. Over the past few years, a number of luxury brands have been doing away with their diffusion lines, including Armani, Dolce & Gabbana, Burberry and Marc Jacobs, while Victoria Beckham merged her Victoria Beckham Denim line into the Victoria, Victoria Beckham collection.

“The fixed marketing costs to sustain a line are increasing, it only makes sense to consolidate where this is possible,” said Luca Solca, head of luxury goods at Exane BNP Paribas.

In an internet driven world, shoppers have access to more products — at a range of price points — than ever before. Plus, today’s retail landscape is no longer driven by wholesale. The shift towards direct-to-consumer distribution and the rise of e-commerce means a strong brand identity is important for brands looking to cut through the noise and reach their consumers, who can become confused when overwhelmed by a variety of sub-brands.

"In today's market it is the consumer that directly drives the success of a brand rather than the wholesaler," said Mario Ortelli, managing partner of luxury advisors Ortelli & Co.

“When you have got too many lines, you have some duplication for sure in your structure from a design point of view and distribution. When you’ve got a unique line, it is also easier to focus the effort of your organisation and your marketing spend.”

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