MILAN — Jonathan Akeroyd chooses his words carefully and, in his first interview since his arrival at Versace in 2016 from Alexander McQueen, the executive comes prepared, with notes and precise data, never shying away from the questions — even the uncomfortable ones.
After a difficult 2016, Akeroyd succeeded in returning the company to the black in 2017. He attributes his silence since his arrival at Versace to the need to focus on action, rather than words, setting in motion a retail, wholesale and digital strategy, elevating the brand and”changing people’s perception” of the label, while fully supporting creative director Donatella Versace.
Akeroyd, who succeeded Gian Giacomo Ferraris has navigated through months of chatter as Riccardo Tisci and then later Kim Jones were said to be joining the company, although neither deal in the end ever materialized. Before his arrival, the company was eyeing an initial public offering, but this is not being considered at the moment as the executive is set on growing the business instead, eyeing a sales target of one billion euros. Here, Akeroyd discusses Donatella Versace’s clout and “icon” status; his views on opening up to a younger and new customer; the launch of a new store concept, and his plans to grow the European and American markets to the level of success the brand has achieved in Asia.
WWD: In the two years since you joined, what have been the main challenges and what has been achieved?
Jonathan Akeroyd: Yes, it’s been literally two years, very much split in two. In the first year, the most interesting thing for me was just meeting Donatella, hearing her vision and seeing it was completely aligned with my perception of the brand and where it needed to be. It was a great start and from there, we started to map out very quickly a blueprint for what I felt the priorities needed to be. One was to simplify the business, prioritize the first line. I thought it was a lot stronger and that it needed to be recognized more. We as a business needed to focus and push it in terms of retail and wholesale. Fully supported by Donatella, it was really about elevating everything we did in terms of communication, but obviously starting with the product. We obviously have great heritage, but I don’t think we have been telling enough of the great story and everything we have with the brand, the DNA, the codes and the marks. There was a big opportunity to refresh all of that, focusing on the first line and elevating it, then changing people’s perception of the brand. That was key.
WWD: How did you think Versace was perceived?
J.A.: The perception was not the reality, that’s what I could read into it. The engagement I think wasn’t there. People were a little bit confused, also by what we were doing. When I joined we had opened many stores; at the time, there were around 250 stores. Actually, it was a very good retail positioning in most cases, but we needed to make those stores more productive. I believe we had to change toward a retail culture, how to get better productivity and put in place a lot of initiatives, elevating the message for the brand, with more storytelling, going into communication and product, be more Versace because I think that, even though the messages were very clear and the collections were strong, we all felt we should embrace the DNA and bring out the codes in a better way. As you saw from the show we did in September, Donatella’s point of view was about celebrating the past and celebrating Gianni, but also to introduce everything about the brand to a completely new audience, and it’s incredible how we achieved those goals. We’ve seen this coming through this year, we’ve got a huge uplift and a different, younger customer.
WWD: In the 2016 fiscal year, investments pushed the company into the red, while sales grew. How was the performance last year?
J.A.: There are small improvements on 2016. We grew our retail by 4 percent and sales totaled 686 million euros, in line with the previous year [when they reached 669 million euros]. We are back in the black as net profit reached 15 million euros, compared with a loss of 7.4 million euros in 2016. We saw a slight improvement on EBITDA [earnings before interest, taxes, depreciation and amortization] last year to 44.6 million euros [compared with 44.3 million euros], as a result of the resetting of the blueprint we put in place, but the most encouraging figures is the momentum we have today. In the 12 months through April, our performance is super strong: Stores were up 18 percent on last year, and EBITDA was plus 50 percent. In the full year 2017, we held, it was OK, but the great thing is that we have this great momentum in the recent 12 months. The encouraging thing for us is we know that everything we put in place, from design to execution and communications and excellence in retail, we definitely know we are on the right path.
WWD: Rumors have been swirling about the closure of Versace Collection and Versus. Are they true?
J.A.: No, what we have done is we’ve closed 42 stores in the last year — which is significant — and 21 of those have been Collection and eight Versus. What we are doing is focusing on retail for the first line retail and pushing out Collection and Versus toward wholesale.
WWD: How much of the total does the signature line account for?
J.A.: It represents 75 percent of total, the rest is made up by Versus and Collection in wholesale and some franchises, some in Asia for example.
WWD: There have also been rumors about staff changes and layoffs.
J.A.: There’s been no restructuring. We are not letting people go, but there has been a complete change, a big overhaul of my management team. We brought in more people, [pointing to] Valerio [D’Ambrosio, worldwide head of communications] from Dolce & Gabbana, for example. We’ve grown without reducing our own store count. We are becoming a lot more productive in the business, we have been investing, and in the last year opened 21 stores, all for the first line. There’s been some relocating, prioritizing the first line. In some key cities, we needed to upgrade and refresh some stores, as in London’s Sloane Street, which we completely refitted. We did a makeover for Milan, the same for New York. At the end of this year, we will be introducing a completely new store concept, which will be designed by the company Curiosity led by Gwenael Nicolas, in the last quarter of this year in Bal Harbour, Miami, Munich, which is an existing store, and China World in Beijing, to highlight this new product offer that we’ve enhanced and upgraded.
WWD: Is this the first time you worked with Nicolas? And could you share some details of the new concept?
J.A.: Yes, we are very excited. We saw the prototype. We’ve started to build a stronger sustainable message for the company. The store in London is LEED fully certified, the first on Sloane Street and the whole priority of all of our new stores is this, it needs to be a pillar, the key message to really show the new Versace. I hate to say that, I’m sure you’ve heard that many times before, but it comes at the end of all the work done in the past two years.
WWD: Donatella Versace spoke to WWD in November about the new sustainable headquarters in Milan’s Porta Nuova district.
J.A.: Yes, it’s great, we are a young company, everybody is young, they all completely embrace it, this is the first major step.
WWD: When will you relocate?
J.A.: At the end of next year. We’ve also invested in people. In fact, I’m surprised [about the rumors], because it’s actually the opposite. We’ve strengthened the design team, we’ve invested in more people across all functions, obviously in retail as well and in e-commerce. Last week, we launched our direct e-commerce site in China, which is great, and once that’s fully launched, we will link in with Weibo. We’ve seen a very strong growth on our web site, which we refreshed two years ago, but we saw a 50 percent increase last year. [Digital revenues] now represent 5 percent of retail sales and we are developing this even further. It will become a key driver, as for most brands.
In terms of wholesale, we’ve reduced our network [to 300 points of sale] but actually managed to clean it up and reposition it, in line with the elevation mission, and we have better representation in key doors. In the last three seasons, we’ve seen a 15 to 20 percent growth in wholesale, we are seeing good results. Retail sales account for 73 percent of the total.
Fifty percent of our business is in Asia and [the region accounts for] 53 percent of our retail sales , where we have a fantastic footprint. Our priority is that we need to make our European and American business stronger and pull that in line with the success we have in Asia.
WWD: Do you have more stores in Asia?
J.A.: Yes, we have 100 stores in Asia, 30 in America and 60 in Europe, all with great positioning. Asia is our biggest market, followed by Europe, accounting for 28 percent and the U.S. with 18 percent. Another highlight of the last 12 months is that year-to-date sales in America were outstanding. We are up 35 percent and the positioning is right.
WWD: Your experience in retailing and merchandising, more than a decade as merchandising director at Harrods before Alexander McQueen, may also have been a draw for Donatella Versace?
J.A.: I am a merchant basically, so we talk the same language. She’s just great to work with, she moves fast. The interesting thing for me is we are also really pushing on the relevance of the product and she is fully focused on this. Sneakers, for example. We just talked very quickly about the need of having a stronger sneakers business. Within 24 hours, she called me saying she’d found this great guy in L.A., Salehe Bembury, and basically we hired him in an instant. She’s incredible for spotting talent. He’s come in and we’ve launched this incredible new sneaker called Chain Reaction in January. We’ve anticipated deliveries — it was available on April 26 in the U.S. It was sold out immediately; on e-commerce, it was sold out in 15 minutes, and it costs $1,000. The brand is right, there is a huge momentum for the brand. There is a lot more awareness on what we are doing. The perception has changed very, very quickly and the product’s exactly what people want. Donatella’s view on the tribute collection was that she was showing it not only to those that need the brand but to a completely new audience, that’s why we are in a good place and this will continue. It’s not a one-off, we are embracing what we have, there’s clearly an appetite for the DNA that we have.
WWD: How did you feel about the rumors circulating about designers joining Versace, first Riccardo Tisci, then Kim Jones? What happened?
J.A.: As a company throughout the last 10 years, Donatella’s always brought in extremely new talents that have gone on to other things, Anthony Vaccarello, Jonathan Anderson, Christopher Kane, the sneaker designer, and that’s a natural thing to do. She is still very much exploring, open, looking at other options, and she will continue to do that. To be honest, what we’ve all realized is what an incredible asset we have with Donatella — that changes the conversation. When I joined, she had just joined Instagram for less than a year and she had less than one million followers. Now she has three million. [As of June 14, she had 3.2 million.] That’s more than most designers, and the engagement is incredible. If you read about the engagement she gets, it’s super endearing, super positive. As well as what she’s achieved in terms of her collections, the success of the last number of shows she’s done, she’s changed the perception and awareness of her, what people think of her. She’s won many awards and transformed herself into an icon. We are very, very lucky that she’s become respected and recognized and on the back of that, as a brand, we are the eighth most-known brand in terms of brand awareness. We have 13 million followers. There’s a huge brand halo and Donatella’s at the top to enhance that. She wants new people to come in; she is totally open for high-level talent to come in, but at the same time she’s extremely important for us. She’s not going anywhere, for sure.
Going back to the importance of digital and social media, people know her much more now. We were just at the Met [Gala]. She has this draw, this connection with a knock-on effect from the Met, where we were cosponsors. She can call on anybody to dress, and the benefit of that as a brand is huge. We know we’ve had far more reach and exposure that is really linked to her and to people who want to be connected with her, it’s a big asset for us.
WWD: Do you think that perhaps the tribute collection helped her confidence?
J.A.: Before that, when we were discussing the blueprint, it was all about bringing the codes back, elevating the leather goods, bringing the hardware back and making it feel richer. The success of the tribute show is proof that she was right in bringing back the brand codes, the prints for example. That’s what people want from our brand and this will continue, but what she’s trying to do now is making it more contemporary, moving it on, reinterpreting it, mixing it and making it feel younger. It’s not so literal but is mixed with categories people want, casualwear etc. We balance luxury, the atelier halo, with what is underneath that, the everyday items, the sneakers, the T-shirts. It’s critical to have that, that’s been a big change for us, and strengthening the design team, supporting Donatella with a merchandising department and making sure the offer is more complete.
WWD: How many employees does Versace count?
J.A.: We now have 2,300 employees.
WWD: Speaking of couture, do you think you will go back to holding a show?
J.A.: No, we were doing eight shows a year. I felt very strongly about focusing it down, making the message stronger, with less shows and investing more in the ones we hold. The last shows have been super well-received. As far as the Atelier, we do more celebrity dressing and the power of that is incredible. The visibility actually of our Atelier is no worse, probably stronger. We still have presentations in Paris, we have more intimate events with our clients where we make them feel like real Atelier clients. They are seeing a lot of celebrities, the craft, they see the clothes as they are. For Versus it’s the same: We decided for the moment to promote Versus through a different channel, digitally and through advertising.
WWD: Is this also a way to contain costs?
J.A.: No, communication spending has actually grown, we are just using it in a different way. The tribute collection was women’s and that was beyond exceptional, but men’s wear is growing at a similar pace and it is not tribute-related. Men’s and women’s are equal, almost 50/50, and it shows without a doubt we are one of the strongest men’s wear brands but also shows definitely we have a lot of opportunities [in both categories]. Leather goods represent 25 percent of total and ready-to-wear 54 percent. The rest is shoes.
WWD: Have you shelved the idea of an initial public offering?
J.A.: Since I’ve joined my wish is to steer the business. My whole goal is to make this into a great brand, and we haven’t discussed the IPO. The board, Donatella, myself, we are all completely aligned. Our goal is to become a one-billion-euro brand sooner rather than later. Anything around that will naturally happen.
WWD: The Blackstone Group took a 20 percent stake in Versace in 2014. Private equity funds generally consider an exit after three to five years. What can you tell us about its intentions?
J.A.: They are strong partners for us, they are heavily engaged, and they are on the board. We meet every month and they are completely aligned with our strategy. They know there is still more work to be done, but they are very supportive. It’s in their interest, too, and they are quite comfortable.
WWD: Looking at 2018 what are your main concerns or challenges?
J.A.: Mostly the currency fluctuations, particularly the dollar and the euro. The management of that, how we react to that in terms of pricing. You need to be fluid and be flexible. But the priority is more a branded priority. We need to reset everything, concentrate on making our European and American business as strong as it is in Asia, and we are on the right way to achieving that. I was with Blackstone just yesterday and for us, it’s more about the internal opportunities we have.
WWD: You said you brought in a new management team. What do you look for in your staff?
J.A.: We need to be a lot more of a product-focused company, that was the need for me. Everybody that we hired has great experience, they come from incredible brands. We need added value, we need to make sure we are all aligned with the same goals. We get together very regularly. It’s about having that right focus and a belief in the brand. Particularly 2016 was a tough year, but still there was the inner belief we were on to something quite special and there was positive energy. A big eye-opener was the length of service here. It’s not only about the newness, there is a really nice balance. I am amazed by the length of service here and the level of experience and knowledge.