Gianni Versace
Gianni Versace, the Italian fashion house favoured by Hollywood celebrities, is considering a return to Japan, but not a stock market listing, as an aggressive restructuring aimed at staving off its near collapse during the financial crisis shows some signs of taking hold.
A turnround in fortunes at Versace, which came close to becoming one of the most dramatic casualties of the downturn, comes amid increasing evidence of optimism in the luxury goods industry as it emerges from the worst conditions for high-end consumption in more than two decades.
The fashion house, founded by Gianni Versace in 1978 and owned by the Versace family, became for many industry experts a symbol of the end of an era of consumer excess and the advent of an age of austerity when it launched a dramatic restructuring last year.
Gian Giacomo Ferraris, who was brought in as chief executive in 2009, has since slashed a quarter of its workforce and a tenth of the marketing budget, merged two factories, and shut non-core businesses.
In the most dramatic sign of its decline, Versace had also pulled out of Japan, the world’s second largest luxury goods market, after nearly 30 years.
A year into his turnround and Mr Ferraris, a former executive at Prada, Gucci and Jil Sander,says he is “more optimistic” than he expected, so much so that he is considering pushing the company to open stores in Japan once again. He has increased full-year revenue and profit forecasts after better than anticipated nine-month sales.
Full-year revenue will exceed €280m ($388m), more than the €270m that was forecast in January. Earnings before interest, tax, depreciation and amortisation, the crucial indicator for the luxury goods industry, will reach at least €18m by the end of the year,cheap ghd straighteners compared with a previous forecast of €13.3m.
Versace would still show a small loss in 2010, but should reach break-even in 2011. Net debt has been reduced to about €70m, from about €80m in 2009.
The luxury goods industry should on average see growth of 4 per cent this year, reversing an 8 per cent decline in sales last year, according to Bain, the consultancy.
Italian family-owned Prada and Ferragamo, and Moncler, the Franco-Italian maker of high-end down jackets owned by private equity group Carlyle, are considering stock market listings.
Ferre, a fashion house which fell victim to the crisis and went into administration last year, is in the process of being bought by a consortium including Samsung and Prodos Capital Management.
US luxury department stores outperformed the rest of the retail sector during September, underlining the extent to which more prosperous shoppers are leading the recovery in consumer spending.
Although Mr Ferraris admits much of the uplift at Versace has come from its retrenchment, he says sales growth has also been supported by an improvement in the “global scenario”
ghd mk4 for luxury goods. Like his peers, Versace has seen growth driven out of Asia. It has 26 of its 88 stores in China alone. Versace sales in Asia rose 20 per cent in the past nine months, compared with 4-5 per cent in Europe and the US.
Mr Ferraris insisted Versace was not interested in following those peers and looking for a stock market listing or private equity buyer, nor did it need to increase its debt to support its growth.
After a season of excess, he said creative director Donatella Versace, sister of Gianni Versace, was “working hard” with the management team to keep the company in the family’s hands.
“We are not a big company but we have a critical mass in terms of supply chain and retail presence which means we can support ourselves with our own energy,” Mr Ferraris said.
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