Bloomberg News

Versace Sees Double-Digit Revenue Growth After 2011 Profit

March 27, 2012

Gianni Versace SpA forecast revenue growth of at least 10 percent in each of the next three years after “fantastic” U.S. demand helped the Italian fashion house swing to a profit in 2011.

Net income was 8.5 million euros ($11.4 million) last year compared with a loss of 21.7 million euros in 2010, the Milan-based company said today in a statement. Revenue climbed 16 percent to 340.2 million euros.

“We are cautiously optimistic for 2012,” Chief Executive Officer Gian Giacomo Ferraris said in the statement. Sales this year will increase at “more or less” the same rate as they did in 2011, Ferraris said today by phone.

Versace echoes Hermes International SCA (RMS) and other luxury companies in predicting sustained demand for their products amid slowing economic growth in China and Europe’s debt crisis. Sales of high-end goods should rise 10 percent in 2012, half last year’s rate, as European shoppers cut spending by a mid-single-digit percentage, according to HSBC analyst Antoine Belge.

“America is doing fantastic,” Ferraris said this month in an interview at the Baselworld watch fair. Globally, year-to-date sales “confirm the double-digit growth we gave in 2011.

Medusa-head Logo

Earnings before interest, taxes, depreciation and amortization advanced 73 percent to 38.7 million euros, Versace said today. The fashion house, recognizable by its Medusa-head logo, is aiming for sales of about 500 million euros and an Ebitda margin of 20 percent by 2014.

Revenue will climb at a “really strong double-digit” pace this year in the U.S. and by “a significant single-digit” amount in Europe as Versace expands its retail presence, including in Italy, the CEO said today.

This year, Versace will open at least 10 directly operated stores in China, Hong Kong, Macau, Taiwan, Singapore and Malaysia, three or four so-called corners in Japan, as well as adding franchises in Beirut, Kuwait City, Dubai and Abu Dhabi, the CEO said. The plans also include units in Los Angeles and the southeast of the U.S., he said.

In Europe, Versace will refurbish a boutique in Milan and add a second, Ferraris said. After closing unprofitable outlets in the past three years, the company is ready to take other opportunities in Italy, he said. “Now is the time we can dare a little more.”

Versace “is doing very well” in Germany, he also said.

Younger Clientele

Versus, a line that targets a younger clientele, will exceed 10 million euros in sales in 2012, Ferraris said. The goal for the label co-designed by creative director Donatella Versace and Christopher Kane is to generate at least 40 million euros in three years, the CEO said.

Versace will introduce e-commerce in Europe, Australia and the U.S. no sooner than September, Ferraris said.

Donatella and her brother Santo Versace have helped run the 34-year-old company since their brother Gianni’s murder in Miami in 1997. Santo is chairman. They own 20 percent and 30 percent of Versace, respectively, while Donatella’s daughter Allegra, a non-executive director, owns the rest.

While Versace receives approaches every day from investors seeking to buy a stake, there’s “no way” the company will seek outside investment in the next three years, Ferraris said. An initial public offering isn’t being planned, the CEO also said.

To contact the reporter on this story: Andrew Roberts in Paris at Aroberts36@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus