By  on March 30, 2007

MILAN — Gianni Versace SpA is back in the black and on track for a potential initial public offering.

Versace said Thursday it posted net profits of 19.1 million euros, or $24.1 million, last year. Year-earlier figures are not directly comparable because asset sales, including that of the family's Manhattan town house, padded accounts. Net profits in 2005 were 35 million euros, or $43.7 million.

Versace's sales dropped 6.2 percent to 288 million euros, or $362.9 million. (Dollar figures have been converted from the euro at average exchange rates for the period to which they refer.)

A slip was expected since the fashion house has been phasing out various product lines — including Versace Classic swimwear, innerwear and children's apparel — as it repositions into higher-margin luxury items. The 288 million euro sales figure is higher than the 270 million euros forecast that Versace chief executive Giancarlo Di Risio gave in September.

"We are more than a year and a half ahead of plans. Now we are looking to the future, which will be a future of growth," Di Risio told WWD.

The ceo, who has spearheaded restructuring efforts at the company, reiterated that he wants to get Versace on track for a possible stock market listing. Still, he stressed it's up to the owners to decide whether they want to take the company public. They will decide on a possible IPO late next year.

"It's a guarantee also for the shareholders to have an organized company that has the potential to go public," he said.

Regardless, it looks like the climate in Italy for IPOs is improving. On Thursday, Aeffe SpA said it is planning to list on the Milan Stock Exchange [see separate story]. Prada and Ferragamo are also planning future IPOs.

Versace managed to move into a positive cash position last year of 11.3 million euros, or $14.2 million. Net financial debt was 1.5 million euros, or $1.9 million, at the end of 2005.

"This is a machine that is producing both profit and cash flow," Di Risio said.

In particular, Versace said sales and margins improved in the wholesale business. The company also said accessories have grown to account for 30 percent of sales compared with 19 percent the year before.Di Risio said Versace is finishing up the renovation of its stores to the black and white retail concept. Versace has 83 stores around the world and plans to open about 11 this year, including several stores in Asia and its first in Costa Mesa, Calif.

The ceo declined to release a financial forecast for the current year, but said that business is stable and he sees no sign of a slowdown.

"I hope this state of equilibrium continues," he said.

Versace is also bolstering its management team. In January, a new chief financial officer, Massimo Sala, started at the company. A former executive at airport authority Aeroporti di Roma, Sala replaces Daniele Ballestrazzi, who will now oversee special projects at Versace.

Meanwhile, Versace's biggest shareholder, Allegra Beck Versace, is facing her own set of challenges. A flurry of media reports about Beck's health circulated in newspapers and on gossip sites this week, prompting Beck's parents, Donatella Versace and Paul Beck, to issue a statement about their daughter's long battle with anorexia.

The statement said that Donatella Versace and Paul Beck "wish to make it clear that their daughter Allegra is not at the present time a patient in a hospital of any type, but is residing at her private address and her state of health is stable."

Beck owns 50 percent of the company. Donatella Versace owns 20 percent and Santo Versace owns 30 percent.

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