MILAN — There appear to be changes afoot at Versace.
This story first appeared in the May 22, 2009 issue of WWD. Subscribe Today.
Sources here claim Giancarlo Di Risio is leaving as chief executive officer following reported strategic differences, while Bain & Co. has been called in to advise the Versace family on the brand’s future direction.
But the family, who owns 100 percent of the company, issued a rare statement Thursday denying the “professional relationship between the company and its ceo has been terminated.” The statement, which didn’t mention Di Risio by name, was not on the company’s letterhead and highlighted that it was sent from the family and not the firm.
In the statement, the Versaces said Bain & Co. has drawn up a three-year industrial plan “with the help of the existing management.” The plan “will be evaluated over the next few days by the board of directors and consequently put into action,” said the family.
One analyst said the decision to bring in external consultants “may have irked” Di Risio, although the executive sits on the board and would be a party to the discussions. In an attempt to flex his muscles and rediscuss his future with the company, Di Risio may also have leaked to sources that he was planning to leave, other sources speculated.
“Versace has been focusing its attention for some time now on the measures it should adopt to confront the effects of the economic downturn on the luxury sector,” the Versaces said. “The Versace family (Allegra, Santo and Donatella), owners of 100 percent of the capital of the Versace company, confirm their full support towards the growth and the consolidation of the company and its activities.”
Prior to Versace, Di Risio served stints at the helms of IT Holding and Fendi. His experience in the luxury goods sector, organizational skills and production expertise helped bring structure to Versace and turn around the company, getting it back in the black. Versace’s largest single shareholder, Allegra Versace Beck, who owns 50 percent of the firm; her mother Donatella, who holds 20 percent, and her uncle Santo, who controls 30 percent, tapped Di Risio in the summer of 2004, the year Beck turned 18 and inherited full control of her stake in the company her uncle Gianni had left her. Santo is president of the board and his sister is vice president and creative director of the brand.
A number of sources said the relationship between the Versace family and Di Risio “appeared idyllic” until recently, but others said there have been increasing strategic differences between the executive and the Versace family.
According to Armando Branchini, deputy chairman of Milan-based consultancy Intercorporate, the friction between the owners and Di Risio arose from “limited cost-cutting over the past year.” Branchini said “the family may have perceived that investments were made as if the market had not changed at all, fearing a heavier indebtedness for the company.”
One Milan-based source said “product and design were tightly supervised, while the commercial organization grew less reactive, and the Versaces may have considered it less efficient than what it should be to face the economy today.”
Last year, net profits at Gianni Versace SpA fell 30.7 percent to 9 million euros, or $13.2 million, on revenues that rose 8.3 percent to 336.3 million euros, or $494.3 million. Dollar figures were converted at average exchange rates for the periods to which they refer.
Di Risio told WWD this year that net debt was “less than 20 percent of turnover,” and described it as “physiological.” The executive also said his plan for the company was to “be consistent” with its strategy, which excluded price cuts.
As reported, Versace has invested 45 million euros, or $57.5 million, in 11 new stores and has succeeded in making the Asian market the firm’s second largest after Europe in terms of sales instead of the U.S. Di Risio said in February that Versace had begun to feel the effects of the downturn “a little” in the last three months of 2008, but that full-year figures were in line with objectives.
Di Risio spent 15 years working under Tonino Perna at IT Holding, pioneering the idea of designer jeans and diffusion line licenses. The executive forged a strong relationship with Versace, persuading the company to launch the Versus collection in the late Eighties. Di Risio has recently been spearheading the relaunch of the line after a four-year hiatus and inked a licensing deal with Italy’s Gruppo Facchini.
The family’s statement did not reveal any details of Bain’s three-year plan, and a spokeswoman declined comment. This isn’t the first time Versace has called in outside advisers, however. The family tapped Credit Suisse First Boston and Lazard in 2004 to explore selling a minority stake in the brand to help fuel expansion. While receiving interest from U.S. private equity players as well as firms such as Istithmar in Dubai, in the end, the Versaces decided not to seek an outside investor.