By  on March 29, 2011

MILAN — Gianni Versace SpA is reaping the rewards of the extensive restructuring plan set in motion by chief executive officer Gian Giacomo Ferraris in 2009. While the Italian luxury house expects to return to the black in 2011, as per its business plan, it posted a gain in revenues and earnings before interest, taxes, depreciation and amortization (EBITDA), and substantially slashed its debt, in 2010.

Last year, Versace’s sales grew 9.1 percent to 292.3 million euros, or $385.8 million, compared with 268 million euros, or $372.5 million, in 2009.

“We gained traction in 2010 — the company performed ahead of plan and was quick to seize opportunities offered by the luxury market,” said Ferraris in an interview at the firm’s headquarters here. “We are confident that Versace will achieve its business and financial goals in 2011.” The company did not provide a net loss figure.

Improved margins and sales and rigorous cost control helped boost Versace’s EBITDA, which rose to 22.3 million euros, or $29.4 million — a significant turnaround from the loss of 2.4 million euros, or $3.3 million, the previous year.

Versace also reduced net debt to 30.5 million euros, or $40.2 million, at the end of 2010, from 80.2 million euros, or $111.4 million, at the end of 2009.

Dollar figures were converted at average exchange rates for the period to which they refer.

“When we announced a significant restructuring of Versace 18 months ago, we expected 2010 sales to remain flat and a recovery in EBITDA to 13.3 million euros, or $17.5 million,” said Ferraris. “The figures we have published today are significantly better than that, with EBITDA some 68 percent ahead of forecast.”

Ferraris underscored the strength of Donatella Versace’s collections, which have been well received both at wholesale, which grew 15 percent to 116.4 million euros, or $153.6 million, and at retail, which gained 9.9 percent to 137.9 million euros, or $182 million.

In 2010, the company shifted its focus back to its core business, its signature brand and bulking up the store network. At the same time, it launched the women’s diffusion line Versace Collection Donna and opened 55 new franchised stores for the line. In 2011, the firm plans to add another 25 franchised stores. “It has a lot of potential,” said Ferraris, who is evaluating the possibility of launching the line in the U.S. The men’s collection is already available in that market.

“Our customers ask us for new products, but everything must be in line with Versace, be very Versace, not discontinuous, and even licenses must be under the same creative umbrella, reflecting the same philosophy and soul of Donatella Versace,” said Ferraris. “She is at the heart of it all and the brand must be distinctive,” he continued.

Ferraris joined the company and became a board member in July 2009, succeeding Giancarlo di Risio. The latter left after a four-year tenure, following disagreements with chairman Santo Versace, his sister Donatella and her daughter and majority shareholder, Allegra Beck. Ferraris has in the meantime pulled the plug on noncore businesses such as customized helicopters with Italy’s AgustaWestland and Versace Murciélago cars with Lamborghini.

Versace also bought back the Versus license from Swinger International SpA, which continues to produce the Versace Jeans line. Ferraris said Versace’s “efficient and fully integrated supply chain” will take over direct management of Versus starting with the spring 2012 season.

The company’s plans to reenter the Japanese market this year were not affected by the country’s tragic earthquake and tsunami, noted Ferraris. “Our own stores in cities such as Tokyo and Osaka are scheduled to open in early September,” he said. “I am confident in the Japanese people’s powers of reaction and in our own prudent plan.” Versace exited Japan in summer 2009, shuttering four freestanding stores. In January it appointed Hiroshi Saito as ceo of Versace Japan to spearhead its development in the region. The executive also revealed Versace has inked a new partnership with IPGI/Toyota to open franchised Versus stores in Japan.

Donatella Versace unveiled a new concept store in Beijing last winter, and Ferraris said the concept will be opened “in a European city in the second half of the year.” All the new stores will be modeled after this blueprint.

The brand plans to open five stores in China this year, reaching 26 units, and units in Singapore and Sydney, among others. Riots in the Middle East somewhat affected the company, as the opening of a franchised store in Egypt was postponed by six months, for example. “There was turmoil in Bahrain, too, but nothing that would make us change our plans,” noted Ferraris.

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