Versace return to profibility
Gianni Versace SpA swung back into profitability in the first half of the year, meeting its original break-even target a year and a half early. Pretax profits for the six months ended June 30 totaled 2 million euros, or $2.5 million, compared with a year-earlier loss of 7 million euros, or $9 million. Sales were essentially flat, dipping less than a percentage point to 148 million euros, or $182 million. Dollar figures are converted from the euro at average exchange rates for the period to which they refer.
Versace is starting to see the benefits of last year’s restructuring efforts, Chief Executive Giancarlo Di Risio said. “Profits are starting to come into Versace’s coffers,” he said. “And all of this was done without a single extraordinary operation. This is from the management of the company.” Looking to the full year, Di Risio said the company is on track to post a pretax profit, but that it’s too soon to forecast whether Versace will do so on a net level. The company is expecting full-year sales to be “above” the 270 million euro, or $332.1 million, mark. That level would represent a 12 percent drop on 2005 figures.
Di Risio said revenues will continue to suffer this year as the company refurbishes its boutiques, including those in Los Angeles, Miami, Brussels and Florence, to its new black-and-white retail concept. The entire retail network should be updated by March of next year, he said. Versace’s decision to discontinue a number of lower-priced diffusion lines and products also will bite into 2006 accounts.
Click Here: liverpool mens jersey
The executive said Versace’s revenues will resume growth next year. Stressing the importance of the new retail concept, Di Risio said sales in the new Fifth Avenue flagship are up 28 percent since the start of the year. “It’s not the quantity of the things we do, but rather the quality,” Di Risio said. “We have chosen a path, which may also turn out to be the more challenging one, to be a luxury brand.”
Di Risio said he’s more interested in preserving the exclusivity of the Versace brand through ready-to-wear, accessories and select licensing deals for ultra-luxe products such as seven-star resorts and jet interiors. Versace has been pushing for exclusivity in accessories as well, offering limited-edition quilted leather bags and other big-ticket items. Accessories account for 30 percent of sales and the company bragged that it reached that target a year ahead of schedule.
The company, which managed to eliminate its debt last year, improved its net financial position in the first half of this year. As of June 30, it was positive for 16 million euros, or $19.7 million, compared with 2 million euros, or $2.6 million, at the end of last year.
As reported, Versace hasn’t ruled out the possibility of a listing on the stock market, but Di Risio again stated the decision rests with the company’s shareholders, Allegra Beck, Donatella Versace and Santo Versace. He said he doesn’t expect a move on that front until 2008 at the earliest. Salvatore Ferragamo announced last month that it’s preparing for stock market listing, a development that would end a years-long dry spell for fashion initial public offerings in Europe. “It’s a choice that depends on the shareholders,” Di Risio said.