Byline: MICHAEL MARLOW, with contributions from ARTHUR FRIEDMAN, New York and SARA GAY FORDEN, Milan

LOS ANGELES — Gianni Versace has decided against showing his collection in New York.

“Right now, my heart is in Milan,” the designer said from his home in Milan on Sunday. “It would be the wrong moment to abandon Milan, which, after all, is the city where I have my business, my home.

“When I was initially offered the chance to show in New York, I was very pleased,” he explained. “It is a city I adore, and it was a difficult period in Italy,” he noted, referring to Italy’s corruption scandal that swept politics and industry. Versace, last April when he discussed possibly shifting his show to New York, was concerned about the speed in which knockoffs could hit the market following his Milan show. A show held weeks later under the tents in Bryant Park in New York could slow that down.

On Sunday, however, Versace said, “A lot has changed in Italy.” He cited a new political climate following elections last spring and successful initiatives such as the Convivio AIDS benefit in June, where the Milan design community showed solidarity. He remains, however, “extremely involved in the United States,” he said. Among his plans: a flagship store in Manhattan and a shop in Los Angeles.

In addition, he said, he intends to stage a show in the U.S. in the not-so-distant future for a benefit or possibly a perfume launch, but not to show his spring collection.

Santo Versace, Gianni’s brother and ceo of the fashion house, confirmed talks for a five-level Versace flagship in Manhattan, housing all the designer’s products, including men’s and women’s apparel, accessories, perfumes and home goods.

The ceo said he would not reveal the location until the contract has been signed. Last December, Ralph Paterno, owner of the two Versace stores on Madison Avenue, said a new store carrying all of Versace’s products would open in Manhattan. At the time, reports focused on 841 Madison Ave., at 70th Street, as the site. Paterno said the new store would be an addition, not a replacement, to existing Versace units, but he did not disclose the location.

In Los Angeles, the company has signed a deal for a Versace Jeans Couture boutique to open on Rodeo Drive this fall.

Haresh Melwani, the Los Angeles-based retailer who operates the Gianni Versace and Versus stores in the Forum Shops in Las Vegas, will open an 8,000-square-foot store at 248 N. Rodeo Drive.

The two-level store will carry the Versace Jeans collection, Versace’s housewares line and Istante, one of his secondary lines.

Melwani said the apparel mix in the store will be evenly split between women’s and men’s and will change based on demand.

He said the decision to open the store on Rodeo Drive came from his experience with the three Versace lines during the past 18 months in the Forum Shops at Caesar’s Palace.

“There’s a lot of action in casualwear right now,” Melwani said. “We’ve been very successful in Las Vegas and thought we could make it in Beverly Hills.”

The new store fills one of Rodeo Drive’s most visible vacancies — the rotunda space in the Two Rodeo Drive center. The space, which is in the center of Via Rodeo, a brick walkway through Two Rodeo, has remained vacant since Two Rodeo opened in 1991.

It currently houses an art exhibit and once was home to the New Mercury Theater. Actor Matthew Modine, who was involved in the theater, had discussed leasing the rotunda full-time for the theater. Other concepts that were discussed for the space included a Japanese department store and a relocated Polo/Ralph Lauren shop.

Peggy Goodwin, marketing manager for Two Rodeo, said the younger consumer attracted by Versace Jeans will complement the customer mix of other established Two Rodeo stores such as Valentino, Christian Dior and Cartier.

Meanwhile, on the East Coast, Fern Mallis, executive director of the Council of Fashion Designers of America, producers of the 7th on Sixth fashion shows, said, “We were looking forward to working with [Versace], but we understand why he chose not to come.” She cited the high cost of bringing the collection and staff from Milan.

Mallis said, as of Friday, the British firms Ghost and Liza Bruce are the only European companies on the New York show schedule, which will kick off on Saturday, Oct. 29, with DKNY and end on Friday, Nov. 4, with Donna Karan.

Prada, Dolce & Gabbana and four other European companies have “expressed interest” in showing, Mallis said. She declined to name the four, but said Giorgio Armani, who earlier this year hinted he might show in New York, was not one of them.

Last season, Prada, Ghost and Bruce were the lone European firms to show Bryant Park as part of 7th on Sixth.

“We have such a full schedule, it’s going to be hard to accommodate too many other people,” Mallis said.

The CFDA is committed to designers who will show their collections for the first time in a season in New York, not to those who show first in Europe and follow with a New York presentation.

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