MILAN — It’s the stuff of any teenager’s dreams — a party at a cavernous nightclub, a performance from hip-hop sensation Pharrell Williams and customized T-shirts for 100 of her closest friends.
That’s what Allegra Beck got on Saturday to celebrate her 18th birthday, which actually takes place on June 30. But her biggest present is yet to come: At the end of the month, Beck will inherit full control of the 50 percent stake in Versace that was bequeathed to her by her uncle, Gianni Versace.
This story first appeared in the June 15, 2004 issue of WWD. Subscribe Today.
The imminent transfer of power means the teenager will hold the single-largest stake in the company, with her mother, Donatella, owning 20 percent and her uncle, Santo, the remaining 30 percent.
And the new power structure is generating enough newsprint to wallpaper the company’s sprawling headquarters on Via Gesù.
But those counting down the days to drama may need to think again — sources close to the teen stress the birthday will come and go without boardroom tremors. A Versace spokesman declined to comment on Allegra Beck’s intentions and their potential impact on the company, but it’s widespread knowledge that she is currently wrapping up her studies in Italy and plans to head to a U.S. college in the fall. Such an itinerary doesn’t allow for a lot of free time to take on a managerial role in the company, especially a company in the midst of a turnaround.
As reported by WWD over the last few months, Versace has taken a series of steps aimed at tightening its operations and preparing it for new investment. Daniele Ballestrazzi, the company’s interim chief executive, said in March that the firm had appointed Lazard Frères and Credit Suisse First Boston to find a minority investor, with the eventual plan of taking Versace public.
The investment could come as early as this year. Nearly every conceivable fund name has circulated in the local press as potential buyers, from Doughty Hanson to Apax Partners to Italian-led Clessidra. Apax declined to comment for this article and Doughty Hanson and Clessidra didn’t return calls for comment.
“This is one of the few legendary brands around,” Ballestrazzi said. “The time has come to resume the project” of taking the company public, which had been Gianni Versace’s dream before he was murdered.
In March, Ballestrazzi declined to specify how much of a stake the Versace family was willing to sell, but several weeks earlier, Santo Versace told the Italian newspaper Corriere della Sera that the company would be willing to sell as much as 25 percent to a fund.
Still, many in the industry have been wondering how Versace will address the issue of managerial control for a third party eager to protect and grow its investment, especially at a time when it’s imperative for the designer house to reverse losses and cut costs.
Versace management currently is focused on streamlining the corporate structure and prioritizing. In May, the company said it will no longer show couture in Paris, opting instead for private appointments with customers in Milan, so as to better allocate resources to its pre-collection and ready-to-wear businesses. The company already had said it was looking at ways to cut its time between product conception and reaching the market and that, starting with spring-summer 2005, it will merge its pre-collection and main collection to speed up delivery time. It also is eager to grow its already-strong accessories business.
Ballestrazzi outlined to WWD in March a restructuring plan to reverse losses and recapture lost market share. He said the company had slashed some 200 jobs over the last six months and planned to close about seven or eight stores by the end of the year and to reduce the size of some sprawling flagships.
“The plan is not just about cutting costs, but it’s about taking back what we think belongs to Gianni Versace,” said Ballestrazzi, who added that Versace shaved 30 million euros, or $36.1 million at current exchange, off its operating costs in fiscal 2003.
He also noted improving market conditions, especially in the U.S. and Italy. Ballestrazzi said sales of Versace’s women’s fall-winter 2004 collection had increased by 20 percent worldwide.
A key component of this strategy is striking lucrative licensing deals to boost revenue flow. The company is negotiating to open more hotel and condo units, such as its six-star resort on Australia’s Gold Coast, and reports are that Versace is looking to emulate its eyewear license with Luxottica in product categories such as watches and beauty.
But Versace’s accounts may get worse before they get better. The company’s shareholders are slated to convene July 5 to approve its 2003 accounts, and Italian press reports, unconfirmed by the company, show its net loss widening to 40 million euros, or $48.1 million, from 5.8 million euros, or $7 million, in fiscal 2002. Versace said earlier this year that preliminary 2003 sales show a slide of 17.2 percent to 400 million euros, or $481.2 million.
In March, Versace solved at least one of its pressing financial problems, getting a 140 million euro, or $169.3 million, loan from Banca Intesa to pay back 100 million euros, or $120.3 million, worth of bonds due this July.
— With contributions from Courtney Colavita