MILAN: Versace returned to a pretax profit in the first half of 2006, leaving behind more than five years in the red thanks to a radical turnaround cure, more wearable collections and a focus on high-margin accessories.
Versace, a favourite with publicity-hungry celebrities for its “barely there” dresses, said its profit was €2.0 million euros against a loss of €7.0 million in the same period last year.
“Returning to profit was our target for 2007 but we have reached it now,” chief executive Giancarlo Di Risio said.
“There are three main points that have helped us: growth of wholesale revenues, improved profitability and sales at our boutiques, and our accessories business.”
The fashion house slid into heavy losses in the 1990s after its flamboyant founder, Gianni Versace, was murdered and his sister Donatella succeeded him as designer.
Since Di Risio took charge in 2004, he has stripped away unprofitable businesses and introduced a focus on accessories such as shoes and bags, opening an accessories-only factory outside Milan.
Accessories have come to make up 30% of turnover and boost the bottom line because of their fat profit margins.
“We have made a precise choice to expand our luxury accessories business, but our clothes sales are also good. The last Versace collections were going very well,” Di Risio said. Donatella has changed the style of her catwalk collections, moving from clinging PVC dresses in shock colours to softer lines and gentler shades, helping stop a decline in sales.
“It is a new route, a new Versace. Donatella Versace has found a style that is a lot more refined, elegant and up-to-date,” Di Risio added.
Revenues came in at €148 million, lower than last year’s €149 million because Versace sold off unprofitable licenses and renovated 7-8 boutiques to replace their opulent gold interiors with a sleek white leather and steel design.
Versace has also overcome years of heavy debts, reaching a positive net financial position of €16 million by end-June.
Although Versace had reached its turnaround targets early, Di Risio said Donatella, her brother Santo and daughter Allegra — who own the company — would wait until the restructuring finishes at the end of 2007 before deciding on a bourse listing.
Versace might have tone done a bit, but it has not shied away from controversy. The fashion house is paying tribute to its 1990s glamour days with a new ad campaign featuring its favourite supermodels from that time, including Kate Moss.
Moss is back in demand after a drug scandal prompted several fashion houses to sever ties with her last year.
Asked whether Versace had decided to work with Moss for her shock appeal, Di Risio said: “No, no, absolutely not.”
