What does the future hold for Versace?

Versace, the Italian luxury brand known for its bold, glamorous aesthetic, has long been synonymous with excess, opulence, and cutting-edge fashion. Founded by Gianni Versace in 1978, the brand quickly rose to prominence in the fashion world, attracting an elite clientele and global recognition. 

Over the years, the house has remained a fixture of high fashion, with Gianni’s sister Donatella at its helm since her brother’s untimely death in 1997.

However, in recent months, the brand has faced significant challenges, and now, as Donatella steps down from her role as creative director, Versace stands at a crossroad. The brand’s future hinges on how it adapts to the evolving luxury market while navigating the transition in leadership. 

With speculation about a potential sale to the Prada Group gaining momentum, the direction in which Versace will go next is increasingly uncertain. 

Despite its family history and continued celebrity-driven visibility, Versace has struggled to turn its cultural prominence into consistent commercial success. The brand is in a precarious position, with its financial performance showing signs of distress. 

According to Francoise Hernaez, head of luxury at Kantar, Versace’s luxury positioning remains strong, but the company is grappling with slowing demand within the wider luxury sector.

“Versace has built strong emotive positioning among luxury buyers in Italy thanks to its bold and edgy direction,” Hernaez says. “It has also maintained strong ties with its Italian provenance, which plays a role in differentiating the brand from competitors.”

Despite these emotional and cultural ties, the brand faces a significant challenge in bridging the gap between brand recognition and commercial success. As Hernaez points out, in a time of economic slowdown, luxury brands must work harder than ever to sustain demand and justify their high prices.

This issue is evident in the brand’s mixed retail performance. In recent fiscal reports, Versace’s revenue declined by 15% in Q3 of 2024-2025. While the brand continues to hold an important position within Capri Holdings, the parent company that also owns Michael Kors and Jimmy Choo, its retail presence remains underperforming relative to its competitors. Versace, it seems, is at a crossroads between preserving its cultural identity and addressing its commercial vulnerabilities.

Donatella Versace’s departure

The announcement that Donatella Versace will step down as creative director of the brand she has helmed for decades has sent shockwaves through the fashion world. Donatella is more than just the creative force behind Versace — she is the face of the brand. Under her leadership, Versace has been catapulted into the international spotlight, with celebrity endorsements, glamorous red-carpet moments, and eye-catching runway shows that have kept the brand at the forefront of the luxury industry.

However, her departure raises critical questions about the future of the brand. Louise Deglise-Favre, senior apparel analyst at GlobalData, acknowledges that Donatella’s leadership has had a profound impact on the brand’s success, but also recognises the difficulties that lie ahead.

“Donatella Versace is the name of the brand,” Deglise-Favre explains. “It’s a family-run brand, historically. She picked it up from her brother, and there’s a strong imprint of her within the brand and within the design. But she’s still staying on as kind of like a face of the brand. I think it’s going to be big shoes to fill.”

The transition will likely create a period of uncertainty, especially since Donatella’s influence has been so ingrained in the creative direction and identity of Versace. As the brand shifts leadership to Dario Vitale, who comes from Miu Miu, a brand renowned for its rapid growth and cultural relevance, the road ahead seems uncertain.

Dario Vitale: A new era for Versace?

The choice of Dario Vitale as the new creative director is a signal that Versace is ready to embark on a new chapter. Vitale brings a fresh perspective, having worked with Miu Miu — a brand that has seen success by embracing youthful, cutting-edge designs that appeal to a broader audience.

However, this change could lead to some initial turmoil as the brand navigates a period of creative disruption. While some may welcome the revitalisation that Vitale brings, it is unclear whether his vision will resonate with Versace’s loyal customer base, which has been accustomed to Donatella’s bold and maximalist designs.

Hernaez explains the challenges that lie ahead for Versace, as it transitions under new leadership: “It’s critical that these brands continue to invest in building strong relationships with their luxury audiences, both to sustain demand and justify prices. To build clear positioning over the long-term, as well as navigate periods of change and uncertainty, brands need to be consistent. Consistency across identity, message, tone, and delivery will reinforce positive connections in people’s minds.”

With Vitale’s appointment, Versace is signaling a shift toward a more youthful and energetic aesthetic, which could appeal to new, younger consumers while preserving the brand’s bold heritage. However, the extent to which this change will be embraced by the established luxury market remains to be seen.

Prada in the picture?

In addition to leadership changes, Versace is also facing increasing speculation about a possible sale. In a time of consolidation across the luxury sector, brands like Prada and Tapestry have been mentioned as potential acquirers. 

While Capri Holdings, which owns Versace, has not confirmed any plans to sell the brand, the financial pressure caused by declining revenues might prompt the company to reconsider its strategy.

Deglise-Favre believes that the primary motivation for a potential sale is financial. “I don’t think there are other factors at play,” she says. “I think it’s mainly the investors who want to… maybe they’re realising that turning the brand around is more difficult and more time-consuming and investment-heavy than just… selling it off.”

The potential sale to the Prada Group has gained traction, particularly given Vitale’s previous work with Miu Miu, a brand under Prada’s umbrella. While the idea of an acquisition by Prada makes sense from a financial standpoint, Deglise-Favre raises concerns about how the two brands would integrate. Versace and Prada cater to distinct customer bases with very different aesthetics and positions in the market.

“I think it’s definitely a positive for Prada in terms of investment and resources,” Deglise-Favre notes. “Prada has money to invest in the brand, but I’m not sure it’s a good fit for them, honestly. Versace’s aesthetic is so different, and the customers are quite different too. It’s a bit of a risk for Prada.”

If the sale does go ahead, it is likely that Versace would remain a separate entity within the Prada Group, preserving its distinct identity and aesthetic while benefiting from the operational synergies of being part of a larger conglomerate. The challenge for Prada will be to diversify its portfolio without compromising the essence of either brand.

What’s next for Versace

As Versace stands at this critical juncture, the next few years will be crucial in determining its future. The key indicators of success for the brand will be whether it can regain commercial viability while maintaining the emotional and cultural connections that have made it an enduring symbol of Italian luxury.

The ability to create “iconic” products, especially in the realm of accessories, will be essential for the brand’s long-term success. As Deglise-Favre points out: “Consumers know the aesthetic and fashion of Versace, most of the time they would recognize it from print and from the logo. But I don’t think at the minute that they’ve got really, like, an iconic product. That’s what they’re missing.”

If Vitale can successfully marry innovative designs with Versace’s signature glamour, the brand may be able to carve out a new niche in the luxury market, one that appeals to a new generation while maintaining the loyalty of its core customers.