Summary
Michael Kors has acquired Versace at a +$2 billion price tag, now running three luxurious brands.
The core Michael Kors brand will act as a cash cow to rejuvenate the turnaround of struggling brands Jimmy Choo and Versace.
If everything works out as planned, the future looks arguably bright, but the company has to deliver and such a road map will take time.
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Michael Kors (KORS) has long been known for its namesake brands but is delivering quickly on its ambitions to create a luxury brand powerhouse. This occurred first with the purchase of Jimmy Choo and is now followed by the purchase of Versace. As a testament to the strategy, the company has decidedto change its name into Capri.
While Michael Kors remains the dominant brand in the portfolio, the company has essentially obtained two smaller ¨turnaround¨ brands for which it has large ambitions. The near term dip in the share price is completely understandable as I remain upbeat on the long term prospects for the company, even with the new conglomerate strategy.
