MILAN — Gianni Versace SpA is setting the wheels in motion for a possible initial public offering on the back of a strong 2014 — a pivotal year that saw the Milan-based fashion group sell a 20 percent stake to Blackstone Group to fuel global expansion.
This story first appeared in the March 25, 2015 issue of WWD. Subscribe Today.
In 2014, Versace saw net profits jump 27 percent to 26.3 million euros, or $35 million, compared with 20.7 million euros, or $27.3 million in 2013. Earnings before interest, taxes, depreciation and amortization rose 9.8 percent to 67.6 million euros, or $90 million, from 61.6 million euros, or $81.3 million, in the previous year.
Lifted by global gains at both its wholesale and retail channels, revenues climbed 16.9 percent to 548.7 million euros, or $729.7 million, compared with 469.3 million euros, or $619.4 million, in 2013.
Dollar amounts are converted at average exchange for the periods to which they refer.
To report its year-end figures, Versace has adopted International Accounting Standards, in line with the sector’s publicly listed companies. Asked about this procedure, chief executive officer Gian Giacomo Ferraris told WWD that the company is “seriously and concretely preparing the process [for an IPO]. This is one step.”
The executive is also working on strengthening the company’s management structure and organization, as well as “activating committees from next year so that the company is ready [to go public].” Ferraris reiterated that “there is no date, it depends on the market,” in a three-to-five year time frame.
Versace executives denied reports the IPO could take place next year. Ferraris has said in the past that the firm would look seriously at an IPO only once it reached revenues of 800 million euros, or more than $860 million at current exchange.
Leveraging the funds injected by Blackstone — which paid 210 million euros, or $228 million at current exchange, for a minority stake in Versace — the company last year accelerated its retail development. “With Blackstone, we can be competitive and recover positions,” Ferraris said. Retail sales in 2014 grew 16.1 percent to 310.8 million euros, or $413.3 million, and wholesale revenues climbed 17.7 percent to 195.7 million euros, or $260.3 million. Versace opened more than 40 directly operated stores last year and 30 additional units are scheduled to open in 2015.
Among its most significant openings, the brand last year unveiled doors in Toronto, Dusseldorf, Barcelona and in Milan, in Galleria Vittorio Emanuele II, the luxury shopping arcade the company has helped to restore together with Prada. At the end of 2014, Versace had 183 directly operated stores. In 2015, the company will open units in Vancouver and Madrid, and is reentering Japan. A Versus flagship, due to open at the end of April, a Home unit, and a signature men’s and women’s ready-to-wear and accessories boutique are slated to be unveiled in Tokyo.
Sales in North America grew 28.8 percent, an even more significant gain after a yearly increase of more than 30 percent for two consecutive years. The U.S. in 2014 accounted for 17.5 percent of total revenues. “Our biggest investments in 2015 are aimed at the U.S., a market that is still underdeveloped,” Ferraris said.
Sales in Asia, which accounted for 37 percent of total revenues, rose 15.7 percent. Europe, which represented 36 percent of sales, gained 13.7 percent.
Ferraris also highlighted the 19.2 percent increase in group royalties, which totaled 42.3 million euros, or $56.2 million. The ceo, who once again underscored Donatella Versace’s “creative energy and leadership” in building the brand, pointed to “three key words — fashion, luxury and lifestyle.” He said Versace’s brand extensions, from perfumes and watches to eyewear, also contribute to expansion. Palazzo Versace in Dubai is now set to open at the end of August while earlier this month, Ferraris traveled to Beijing to present the Versace Residences in a new partnership with Chinese firm Mind Group. The residences are located in Chengdu and are slated for completion in 2017.
Looking ahead, revenues in the first quarter of 2015 are in line with Versace plans, claimed Ferraris, who forecast double-digit growth this year. He added that the development of retail, that of the Versus brand and of the group’s online store remain “fundamental priorities.”
Ferraris highlighted the potential of Versace’s e-commerce channel and of the Versus brand, which more than doubled its sales year-on-year thanks to a new seasonless and digital business model. Earlier this year, the company appointed Anthony Vaccarello new creative director of Versus. Versace sells online in the U.S. and eight other countries and Ferraris said that revenues from its e-store represented 7 percent of offline sales in those countries. “Imagine the potential when we expand to other markets,” he contended.
Following Chanel’s decision to harmonize prices around the world, asked about adjustments, Ferraris said the company is looking at its competitors and “discussing how to gradually balance things, starting with the fall collection,” but said no decision has been made.