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Versace Cuts Loss in First Half

Gianni Versace SpA narrowed its losses and cut its debts in the first half and is on track to meet its break-even target in 2007, its ceo said.

MILAN — Gianni Versace SpA narrowed its losses and cut its debts in the first half of this year and is on track to meet its break-even target in 2007, Versace chief executive officer Giancarlo Di Risio told WWD in an interview.

“Work brings about changes very quickly,” Di Risio said, adding that Versace narrowed its losses to 7 million euros, or $9 million, for the six months ended June 30. Revenue totaled 149 million euros, or $192.2 million.

Dollar figures have been converted from the euro at average exchange rates for the period to which they refer.

Versace did not release first-half numbers in 2004. In full-year 2004, losses totaled 95 million euros, or $117.8 million, on sales of 320 million euros, or $396.8 million. The company’s revenue base has been declining as it sells off assets such as its fragrance and timepiece divisions.

For 2005, Versace sees its losses narrowing to about 15 million euros, or $18.5 million, while sales are seen dropping 6.3 percent to 300 million euros, or $369 million.

Regarding first-half numbers, Di Risio said Versace saw double-digit sales increases on an organic basis. Stripping out last year’s sales contributions from recently sold businesses, Di Risio said retail sales were up 21 percent in the half and wholesale sales gained 30 percent.

Di Risio boasted that Versace reached its 2005 debt-reduction target six months early. Debts total 35 million euros, or $43.1 million, and they are seen dropping to 20 million euros, or $24.6 million, by the end of the year.

“Everything was done in record time,” Di Risio said, noting that sales of the Giver beauty arm, watch division and the Versace family’s Manhattan town house all helped reduce the debt load. The ceo, who joined Versace one year ago, has made debt reduction a priority. Debts totaled 127 million euros, or about $160 million, when Di Risio began work at Versace.

Still, the manager reiterated that Versace is not shopping around a stake in the company or planning an initial public offer.

“Only in 2007 when we return to profitability, when we have the fundamentals in place, can the shareholders decide what to do,” he said.

This story first appeared in the September 14, 2005 issue of WWD.  Subscribe Today.

On another upbeat note, Di Risio said women’s pre-spring apparel and accessories orders are up 53 percent on the year.

Versace is proceeding with plans to convert its stores to its new retail concept, featuring black lacquered walls, white leather furnishings and a large space dedicated to accessories.

The company has converted its Milan, Rome and London stores to the new concept. Refurbished New York and Washington stores will reopen at the end of October, while a makeover of the Los Angeles store is slated for next year. New stores in Hong Kong and Shanghai also reflect the cleaner, less baroque Versace aesthetic.