Versace Plots U.S. Growth

MILAN — With Donatella Versace clearly hitting her fashion stride, the Milan design house is turning its attention to beauty, with an eye toward rapid growth.<br><br>Santo Versace, president and chairman of the family firm established by his...

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MILAN — With Donatella Versace clearly hitting her fashion stride, the Milan design house is turning its attention to beauty, with an eye toward rapid growth.

This story first appeared in the May 2, 2003 issue of WWD.  Subscribe Today.

Santo Versace, president and chairman of the family firm established by his legendary late brother, has no patience for incremental growth; he wants action.

Versace freely points out that company has spent the last three years straightening out its product assortment. “Now the only problem we have is to increase the turnover,” he said. “We want to double it in a minimum period — in the next two years. The real value of the beauty industry to Versace should be three times the actual amount.”

According to industry estimates, Versace’s beauty business generated more than $85 million in 2002, 15 percent of total company revenue. Santo Versace has plans to double it within two to three years, making it 25 to 30 percent of the total corporate pie.

All this talk of doubling and tripling revenues is all the more impressive when one considers that Versace is already in the top tier of Italian beauty companies, along with a handful of others.

Versace’s beauty arm operates under Giver Profumi, founded in 1989, which licenses and distributes fragrances, skin care and a makeup line that was launched by Santo’s brother, Gianni, in 1997. In the early years, the first two Versace fragrances were distributed by Yves Saint Laurent.

Giver Profumi have launched 24 fragrances during the past 13 years, including its latest offering, Versace Man. Versace believes beauty success has eluded the company because of problems with the merchandise.

“For three years — in 1997, 1998 and 1999 — we didn’t have the right product,” said Versace, identifying the round packaging of the makeup as one of the culprits. “Now, it has been made square — before, it was impossible to open. The round shape was difficult to sell — it took 10 minutes to sell one item before,” said Versace.

He added that the company spent the late Nineties investing in the U.S. and the Middle East to expand distribution.

“Now, we are ready to push with our products,” he said, “and we have the right mix. We are in the perfect condition to push the new customer.” And the company has a new tool to prod the business with Versace Man, which is following on the heels of the 2000 entry, Versace Woman. The men’s scent was rolled out in Italy late in April. A U.K. launch is slated for June and the U.S. will follow in late September.

Ferdinando Silva Coronel, managing director of Giver Profumi, said the company was now in a position to grow after consolidating important markets in the U.S., China and Russia.

“We wanted to develop our business and achieve a new market share. We started from the U.S. and Europe and worked our way into China and Russia — our turnover in Russia is worth $5.35 million and it increased 20 percent last year.” Dollar figures are translated from the euro at current exchange rates.

Today, some of that investment focus has turned to China.

“We started to invest in an important way depending on the trend of the market. China will be an important factor for the future of the world,” said Coronel.

According to industry estimates, in the U.S., Versace does a total beauty volume of about $20 million at retail. The launch of Versace Man is expected to push that volume further. Sources indicate that the retail volume can be increased to $25 million or $30 million within three years.

In New York, Marjorie Wollan, president and chief executive of Versace Profumi USA, is mapping out strategy. Wollan, who previously headed Guerlain and Annick Goutal in the U.S., said of Versace: “It is a brand with a very clear point of view.” She plans on marshalling the brand’s fashion success behind its natural positioning of “glamour and seduction.”

First, Wollan restructured the subsidiary. Bob Rodgers was promoted from field sales manager to national sales manager. Pat Caltabiano, previously assistant sales manager at Guerlain, was recruited as training manager. Melanie Barletta was promoted from marketing assistant to marketing manager.

On the second front, she is focusing brands, starting with the makeup and skin care, which is distributed in only 70 U.S. doors. “If any company is an authority in makeup, it should be Versace,” Wollan said. “I coined the phrase, ‘From the runway to the face.’” Wollan plans on doubling the business within 18 months.

One step was taken at the end of April with the launch of Eye Couture, a wet-dry pencil available in five shades with a price tag of $30. The company also is beefing up promotional support for a skin care product already on the market, a Revitalizing Eye Zone Masque and Serum. A box of eight under-eye patches, priced at $75, is designed to relieve puffiness. A kit including the serum is priced at $200. Promotion also will be increased for Radiance Lift Concentrate, a $175 set of ampules designed to give the skin extra glow.

Turning to the third phase, Wollan said: “I inherited an under-distributed fragrance channel.”

She was referring to the 600-door network, which carries Versace’s 14 fragrances, or about 80 percent of the brand’s business in this country.

Men’s and women’s versions of Versace Jeans Couture fragrances were launched at Sephora in January with little fanfare or support, Wollan noted, but did quite well. She wants to roll out distribution of the Jeans fragrances while heavily supporting a new purse spray of Versace Woman for Mother’s Day, complete with in-store collaterals, Liqua-touch samples, scented inserts and blow-ins.

In general, Wollan would like to grow the fragrance distribution, such as expand it from 10 to 20 doors in Burdine’s, and enter other divisions of Federated Department Stores beyond Burdine’s and Macy’s East And West. Versace is not even in any division of The May Department Stores Co. Inc.

Above all, Wollan hopes to leverage the tremendous fashion image fostered first by Gianni and then his sister, Donatella, whose creative authority extends to beauty. “Nothing leaves the design board without her stamp of approval,” Wollan said of Donatella Versace. And all this also translates into society news. Versace was the sponsor of last night’s Sloan-Kettering benefit in New York.

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