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Versace Ups Sales Forecast

CEO of Versace SpA Gian Giacomo Ferraris also said 2010 revenues would exceed his target of 270 million euros.

MILAN — A year after launching an extensive reorganization plan, Gian Giacomo Ferraris, chief executive officer of Versace SpA, said he expects sales in 2010 to reach more than 280 million euros, or $390 million, up from 268 million euros, or $373.1 million, in 2009.

The 2010 revenues would exceed his target of 270 million euros, or $376 million. Dollar figures are converted at current exchange rates. Ferraris said retail and wholesale revenues each grew 13 percent in the first nine months of the year, compared with the same period in 2009.

Over the past year, Ferraris has streamlined operations, production and logistics, and cut about 25 percent of Versace’s workforce. “Although this plan may have seemed aggressive, I was convinced the company had a future and that the cure was the right one, and today these results are proving us right,” he said.

Last year, the company had operating losses of 49.6 million euros, or $69 million. For the full year, the executive raised Versace’s target of earnings before interest, taxes, depreciation and amortization to at least 18 million euros, or $25 million, from an earlier forecast of 13.3 million euros, or $18.5 million. In 2009, losses before interest, taxes, depreciation and amortization totaled 2.4 million euros, or $3.3 million, mainly due to a slash in royalties derived from licensee Ittierre SpA, which has been in government-backed bankruptcy protection since February 2009.

The company’s debt was reduced to “below 70 million euros,” or $97.4 million, but Ferraris did not provide a year-ago figure. He did say, however, that it stood at 80.2 million euros, or $111.6 million, at the end of 2009.

The executive dismissed talks of a possible sale or an initial public offering, focusing on a desire that the company remain “independent.”

Ferraris repeatedly underscored the backing he has of the Versace family members and their support of his strategies. “I must thank the family, who reacted quickly and was determined to follow the plan,” he said.

He joined Versace and became a board member on July 15, 2009, succeeding Giancarlo di Risio. The latter left after a four-year tenure, following disagreements with Santo Versace, his sister Donatella Versace and her daughter and majority shareholder, Allegra Beck.

As for future projects, Ferraris said, in November a new store concept created by Donatella Versace and an undisclosed architect will be unveiled in Beijing, where the company opened an office last year. Main stores around the world will be remodeled after this design. Versace has 26 stores in Greater China.

Ferraris contended that, in general, “growth will not depend on new openings but on the increase of sales per square meter.” That said, the company also invested in primary locations in 2010, such as stores in Las Vegas and Geneva. “Versace performs especially well in international cities such as Geneva, Milan, Paris, London, Munich, just to name a few,” remarked Ferraris. There are 88 brand stores globally. Europe accounts for 50 percent of sales, followed by Asia, with a 30 percent share.

In 2011, Versace plans to reenter Japan “as soon as possible, either directly or indirectly,” said Ferraris. In the summer of last year, the company pulled out of the region, shuttering four freestanding stores.

In the U.S., which accounts for 20 percent of sales, the company is strengthening its relationship with its existing partners, such as Neiman Marcus, Nordstrom and Saks Fifth Avenue.

The company also relaunched Versus this fall, and for the first year is limiting the distribution to its own stores and 10 to 15 specialty stores. Next year, the company also plans to launch Versus watches produced by Timex Group. The Versus line, launched by Gianni Versace in 1989, has been revived over the past year in the hands of Donatella Versace and her creative charge, Christopher Kane, and through a license with Italian apparel manufacturer Gruppo Facchini.

That firm also produces the young VJC Versace line, previously licensed to Ittierre. Last year, the company also launched the more approachable Versace Collection for women. “Each line is distinctive, but there is Donatella Versace’s fil rouge running throughout, the same emotion, glamour and color,” said Ferraris, drawing a parallel with the image of a grapevine with its clusters of grapes.