MILAN — The fashion and luxury goods industry may not be immune to the financial crisis but that’s no reason to panic, according to Gianni Versace SpA chief executive officer Giancarlo Di Risio.
Instead, “You need to be careful not to make moves which could invalidate the positioning of your brand. Above all, you need to be consistent with your strategy and consistent with yourself…because you have to be a precise reference point for your client,” Di Risio said Tuesday in an interview at the Italian fashion group’s headquarters here.
That strategy, which specifically excludes price cuts, has so far paid off, after Versace reported an 8.2 percent increase in 2008 revenues to 336 million euros, or $494.4 million, including a 4.2 percent rise in the fourth quarter. Profit figures were not available.
“This period, as all crisis periods, will end sooner or later, and clients will remember those brands which have been consistent with their strategies,” Di Risio said, adding Versace’s prices reflected correctly the quality of its products.
“The crisis doesn’t mean that you have to upset or change the company. It just means that you have to be much more careful than before in terms of acquisitions or investments, and much more careful regarding expenditure,” Di Risio said. “If we were to completely rearrange the company and the crisis were to be finished in a year, we would find a firm that was no longer positioned in a certain way and that had undone its strategy. That’s when you would find yourself in a real crisis.
“You need to look beyond the current situation and understand that if you handle it correctly there is a good chance that once the crisis has passed, you will be able to benefit much more quickly than the market because you’ll have all your cards in order and you’ll be ready to attack.”
Di Risio said Versace had begun to feel the effects of the downturn “a little” in the last three months of 2008 but that full-year figures were in line with objectives. In particular, he highlighted the Versace Home division, “which is paying back very well and continues to grow.” Versace also achieved its target of making Asia the company’s second-largest market after Europe, instead of the U.S, following a 45 million euro, or $57.5 million, investment in 11 new stores, he said.
Di Risio declined to give financial forecasts for the current year, but said Versace’s outlook was tied to the depth and intensity of the global recession, which has not spared the luxury industry. “As a consequence we have to compare ourselves to this, but we face it with serenity,” Di Risio said.
To wit, he added that net debt was “less than 20 percent” of turnover, describing it as “physiological,” and that Versace had “absolutely no” need or intention of opening its capital to third-party investors, unlike some of its peers. This is an about-face from the company’s strategy in past years, when it said it was looking for a minority investor.
“That is far away from our philosophy,” Di Risio said.
Meanwhile, a company spokeswoman confirmed that so far the crisis had not impacted investments already slated for this year, including a second stand-alone watch store set to open in Dubai this spring.
Di Risio also declined to discuss what Versace planned to do regarding its VJC Versace and Versace Sport licenses with Ittierre SpA, which was placed into administration last week by parent company IT Holding SpA “out of respect for a partner with whom we have worked for 19 years with mutual satisfaction.”