MILAN — Versace named a new chief executive officer and new board members at a meeting here Thursday — but the new board does not include its largest single shareholder, Allegra Versace Beck, who chose not to join it.
Versace shareholders — meaning Beck, who owns 50 percent of the firm; her mother Donatella Versace, who holds 20 percent, and her uncle Santo Versace, who controls 30 percent — appointed former Fendi and IT Holding ceo Giancarlo Di Risio as the company’s new ceo. It also agreed to expand its board by adding four new members independent of the family.
“We are pleased with the significant strengthening of the company’s management with the appointment of Giancarlo Di Risio as well as the enriching of our board of directors and the strong range of independent professionals who have been called to join it,” Beck, Santo Versace and Donatella Versace said in a statement. It was the first board meeting of the company since Donatella Versace completed her stay at a rehabilitation center in California for substance abuse.
Di Risio was not available for comment.
Beck, who turned 18 this year and thus inherited full control of the 50 percent stake in Versace that her uncle Gianni left her, could have joined the board but chose not to. Beck has enrolled this fall as a student at an American university, and it is believed she will be spending most of her time in the U.S., a factor that could have influenced her decision.
Di Risio will join Versace’s board, along with three others: Marco Salomoni, Paolo Colombo and Massimo Cremona. Colombo and Cremona are both business professors at Milan universities and do corporate consulting. Salomoni is no stranger to the fashion industry, owning a minority stake in Prada Holding NV and sitting on the board of that company since at least 2000, according to Prada’s annual reports. Versace said that Beck and Santo and Donatella Versace voted unanimously to approve the new board, which has a mandate through 2006. Santo Versace was reconfirmed as president of the board at the meeting.
Versace’s board used to consist of three members — Santo and Donatella Versace and Luxottica ceo Leonardo Del Vecchio. The newly expanded body will meet Sept. 2 to reconfirm Donatella Versace as vice president and approve Di Risio as ceo.
This story first appeared in the August 27, 2004 issue of WWD. Subscribe Today.
Di Risio is taking on a position that has seen some turnover over the past few years. He replaces Daniele Ballestrazzi, who held the title of interim ceo for about eight months. Ballestrazzi will stay with the company as a general director. Massimo Cacciatori preceded Ballestrazzi as interim ceo for nine months.
Both Ballestrazzi and Cacciatori had been working on a turnaround plan for Versace, which includes cutting costs, merging similar operations such as corporate communications and advertising to boost efficiencies, striking more licensing and franchising deals and speeding product development and deliveries.
Versace is trying to get back in the black after seeing its 2003 net loss swell to 26.5 million euros, or $32 million, from a loss of 5.8 million euros, or $7 million, in 2002. Sales slid 16.6 percent in 2003 to 403 million euros, or $487.2 million. Dollar figures have been converted from euros at current exchange rates.
Beck has yet to approve Versace’s 2003 accounts. Last month, at her first shareholders’ meeting, she abstained from the vote on the numbers. “She needs time to understand the figures,” Ballestrazzi said at the time.
Meanwhile, Versace is shopping around a minority stake in the company and aims to find a buyer by the end of the year. A laundry list of potential investors and/or partners has popped up in press reports over the past year, ranging from IT Holding and Gucci veterans Domenico De Sole and Tom Ford to private equity groups like Apax and Cerberus. So far none of the parties has confirmed an interest.
Di Risio, a former tractor salesman, has racked up significant experience in the luxury goods sector at the helm of IT Holding and Fendi. One source close to Santo Versace said Di Risio’s organizational skills and industrial know-how could provide Versace with much-needed structure.
“He’s a strong personality. He’s not weak. He’s not a yes man,” the source said. Another source noted that Del Vecchio and Banca Intesa, the bank that loaned Versace 120 million euros, or $145.07 million, to cover an expiring bond issue, probably had a voice in the selection of Di Risio. One of the new board members also has Banca Intesa connections: Paolo Colombo, who sits on the bank’s accounting committee.
Di Risio spent 15 years working under Tonino Perna at IT Holding, a manufacturer that pioneered the idea of designer jeans and diffusion line licenses. Di Risio forged a strong relationship with Versace, convincing the fashion house in the late Eighties to launch the Versus collection, which remains an IT Holding license today. A few years later, Di Risio launched Dolce & Gabbana’s younger line, D&G, at the request of the design duo.
“Our strategy is to attack the market,” Di Risio said in 1997. “The days when you could sit back and wait for the market to come to you are over.”
When the licensing trend abated for luxury brands, Di Risio and Perna embarked on several acquisitions of brands like Gianfranco Ferré and knitwear labels Malo and Gentryportofino. It also diversified into new areas such as beauty products and eyewear. Still, market concerns over the last 12 months about the group’s debt level and the increasing costs of relaunching and repositioning brands have forced IT Holding to backtrack a bit. This year the group sold Romeo Gigli and Gentryportofino, as well as a controlling stake in its fragrance division, ITF.
Di Risio left IT Holding in 2001, and LVMH Moët Hennessy Louis Vuitton named him ceo of Fendi in January 2002. At that time, LVMH had just assumed control of Fendi, buying out Prada’s stake in the company that the two had teamed up to purchase in 1999. LVMH has made it clear that Fendi is a top priority; LVMH chairman Bernard Arnault said in 2002 that it could become “the leading Italian fashion brand within the next five years.”
Di Risio oversaw Fendi’s transition to full LVMH ownership and installed a new management team. He also spearheaded a retail expansion drive and oversaw development of new products, including the popular Chef bag. Still, Fendi has yet to break even, which could be what pushed LVMH to shake up management at the Rome-based house last year. In May 2003, LVMH put Christian Dior president Sidney Toledano in charge of Fendi’s strategy, altering the hierarchy and creating a new boss for Di Risio. Five months later LVMH named another Dior executive, Michael Burke, as Fendi president and chief executive, reporting to Toledano. Di Risio resigned and has kept a low profile until the Versace nomination.