MILAN — Gianni Versace SpA said Friday that it isn’t preparing to issue a convertible bond, denying a press report. The move would be similar to a tack taken by Prada Group before it set itscourse for an initial public offering. The denial comes as industry watchers continue to ponder how the Italian fashion house will drum up fresh funds to expand its empire.In May, Donatella Versace said going public isn’t a priority but the company is leaving all its doors open as it pursues its growth strategy.Meanwhile, the house sees its 2002 revenue rising 5 percent on 2001 sales of $515.54 million, a spokesman told WWD. (Dollar figures have been converted from the euro at current exchange.)In the six months ended June 30, Versace saw its U.S. retail sales advance 24 percent while retail sales in Europe rose 9.8 percent, the spokesman said. He declined to specify sales figures but he attributed the hike to improved assortments and freshly renovated stores.On the financing front, recurring speculation has Versace trying to sell a minority stake to private equity companies like Texas Pacific Group. TPG declined to comment on whether it is eyeing a Versace stake, but a source close to the situation said it is "unlikely" the U.S. company will invest in the Italian fashion group.Armando Branchini, vice president of consultancy firm InterCorporate, said issuing debt could be a logical step for the company but so could selling a minority stake to a financial investor."It depends on what creates the most value [for the company]," he said. "What makes sense for the seller and what makes sense for the buyer."No matter what path Versace chooses, it’s clear the company has its work cut out for it. Santo and Donatella Versace are busy implementing a broad restructuring plan they started 1 1/2 years ago. This plan calls for a tighter control over the house’s image through such measures as taking licensing deals in-house and buying back franchised stores.As part of its cost saving, the Versace spokesman said the company was scaling back its fourth-quarter advertising. "In a difficult luxury marketplace, the company continues to operate from a position of strength, and we have chosen this expense control to help ensure continued profitability."He would not elaborate on the amount of the cuts, but industry sources estimated the slice at about 50 percent of the buy for the quarter.Most recently, Versace bought back direct control over its South Beach, Miami,store for an undisclosed price. The store, which is being refurbished, will reopen at the end of the month. That move marks the ninth store Versace has bought back in the U.S. since last August.

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