MILAN -- Gianni Versace SpA has designs on Wall Street.
Santo Versace, the brother of designer Gianni Versace and the business brain behind the Versace design empire, says his goal is to take the company public by the end of 1995, and he wants to do it in the U.S.
During the 16 years since Santo, Gianni and Donatella Versace founded the design house, the company has grown into a diversified designer fashion and apparel group directly involved in a good part of the production of its name products, as well as distribution and marketing.
With estimated 1993 sales of $248.5 million (414 billion lire) at current exchange rates and net profit of $16.8 million (28 billion lire), up 11 percent each from 1992, the Versace business is the second largest among the Italian designer labels after Giorgio Armani.
Santo Versace, who is chief executive officer of the family company, discussed his desire to take the company public in an interview in his office here.
"We -- Gianni, myself and Donatella -- feel that it is important to give this group a life that is autonomous from that of its founders," he said.
"A company that goes public is like a company that automatically acquires a second and third generation. It is a commitment to carry Versace beyond its founders."
Although Gianni Versace doesn't have any children, Santo Versace and his wife, Cristina, have two: Francesca, 12, and Antonio, who is eight. Donatella Versace and her husband, Paul Beck, also have two children; Daniel, four, and Allegra, eight.
"Our children may end up being even better at this business than we are, but we can't leave them this burden, this obligation to carry the company forward," Versace said, when asked why he wants to list the company when most of Italy's fashion companies have shied away from the stock market.
Versace also noted that going public provides the opportunity to raise capital for growth.
Of the Italian fashion community, only Benetton; Cantoni, which is a subsidiary of the Inghirami Textile Co. group; sportswear maker Fila; designer eyewear maker Luxottica; textile and apparel maker Marzotto; silk maker Ratti; jeans maker Simint, and Stefanel are publicly traded.Although Versace would like to be on the market at the end of next year, no merchant bank has been hired yet for the project, he said.
However, he added, "We work with a lot of banks and a lot of financial institutions, and we are talking over the idea with them."
Versace acknowledged that a listing on the New York stock market will be a significant undertaking, though he said the fact that Gianni Versace has had its books certified by KPMG Peat Marwick each year since 1986 is a giant step in the right direction.
"Listing on a market like Wall Street means that a company becomes a public company in the true sense of the word. We have always worked for the maximum transparency in all our accounts, including from a fiscal point of view," Versace said.
Versace said he is aiming for Wall Street because he doesn't really consider the Milan stock market a serious option. Still, he does not preclude a listing there as well.
"Our government never made any effort to give rules, transparency, credibility to our stock market. Our top industrialists didn't want these rules. They wanted to be free to play their own game, to make it rain or make it shine on a whim," Versace said.
"When I talk about the stock market, I'm talking about Wall Street. For me, that's the most important objective. A lot of things that go on here, if they happened in the States, people would be in jail," he said.
If the plan goes forward, Versace would join the slim ranks of other Italian fashion and apparel companies listed on the New York Stock Exchange: Benetton, which is also traded in Milan, and Luxottica and Fila, both of which bypassed the Milan market altogether.
In the meantime, Versace is also pressing forward with plans for U.S. expansion. He thinks the company has the potential to triple its U.S. sales in the next three or four years.
North American sales currently represent 18 percent of total group sales, or about $45 million (75 billion lire). Some 74 percent of total sales derive from exports, and Europe represents the largest export market, with 36 percent.A key step will be to establish a U.S. subsidiary, something Versace expects to accomplish by the end of the year. Up to now, just about everything has been handled directly from Versace's Milan headquarters, except for Veze Co., Versace's San Diego-based joint venture with Ermenegildo Zegna, which produces the men's diffusion line, V2.
While Versace still wants to expand distribution of the designer ready-to-wear collections, the big push -- and the biggest potential for growth -- comes with Versace Jeans Couture, which was launched in 1991 and is produced by Ittierre, a company that has specialized in designer sportswear.
"Now that the line is more mature, our goal is to open some 200 boutiques around the world, boutiques like the one we opened in Miami," said Versace.
The first Versace Jeans Couture boutique opened in Miami Beach's trendy South Beach neighborhood in December and Versace plans to launch some 40 boutiques in the U.S. alone through franchising agreements over the next year or so. The boutiques will be large enough to include Gianni Versace's new home goods line, which was launched last year and includes table china, bed and bath linens, pillows, picture frames, knickknacks and more.
Versace is also planning on opening four or five Gianni Versace designer rtw boutiques in the U.S. within the next year and some 10 Versus boutiques. Versus is Versace's line of younger fashion, priced about 40 percent below the designer rtw.
"There will be a lot of openings between now and next spring," Versace said.
According to Versace, the structure of the group and the solid relationships it has built over the years with its producers have enabled the company to grow to where it is today.
"The organization of our group is very important because if we were just one little company we would never have achieved the level of growth that we have. We picked good partners along the way," he said.
In terms of production, Gianni Versace SpA controls 100 percent of Alias SpA, based in Novara, which produces parts of couture and parts of the designer rtw for men and women and Istante, a brand for men and women priced about 30 percent below the designer rtw.At its start, Versace also held a stake in an Ancona-based manufacturer, along with two other fashion entrepreneurs, the late Arnaldo Girombelli, founder of the Genny group, and Gigi Monti, who currently manages Basile.
"The important thing is that when we started out, we were born as producers. The company was envisioned as a creator of fashion that also had control over the image, a distributor, and in part, as an industrialist," Versace said.
He explained that after the Ancona company was disbanded due to Girombelli's illness, the company sought out production accords with other companies, many of which are still in force today. (See accompanying box.)
"The logic is to carefully choose your producers, make sure you have a quality product with the right price/quality ratio and provide service to the client," Versace said.
Furthermore, he is also convinced that it is important to control a certain number of sales points. Of the 188 boutiques around the world carrying the Gianni Versace, Versus, Istante and Versace Jeans Couture names, 36 are directly owned.
"It is crucial to have cities like Milan, Paris, London at least partially in hand," Versace said. "The image that these cities creates in the world is extraordinary, and nobody is willing to make the kinds of investments that you yourself want."
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