http://www.businessweek.com/news/2013-04-04/versace-may-reach-sales-goal-early-as-it-weighs-growth-options

Bloomberg News

Versace May Reach Sales Goal Early as It Weighs Growth Options

April 04, 2013

Gianni Versace SpA, an Italian maker of $2,795 dresses, said it may reach a 500 million-euro ($640 million) revenue goal a year early as it weighs up options that may include an initial public offering.

“We will be quite close to this target,” this year, Chief Executive Officer Gian Giacomo Ferraris said today by phone, citing strong demand for accessories and in the U.S. Staying independent or selling a minority stake publicly or privately are all options for the Milan-based company, which hired Goldman Sachs Group Inc. and Banca IMI SpA last year, he said.

“By the middle of 2013, probably we will have a scenario of possibilities,” Ferraris said.

Luca Peyrano, head of primary markets in continental Europe for London Stock Exchange Group Plc, said yesterday that he expects more initial public offerings in Italy after the listing of agenda maker Moleskin SpA and the IPOs of luxury-goods companies Salvatore Ferragamo SpA and Brunello Cucinelli SpA.

In the fashion industry, “you can find somewhat of a premium listing in Milan,” Peyrano told Bloomberg Television yesterday, citing share gains of more than 100 percent at Ferragamo and Cucinelli since their stock market debuts.

Retail sales at Versace surged more than 20 percent in the first quarter. The company, recognizable by its Medusa-head logo, follows Hermes International SCA in signaling strong sales in the first three months of 2013. The luxury market will expand between 6 percent and 7 percent annually in the next five years, led by demand from Asian and Latin American consumers, estimates Mario Ortelli, an analyst at Sanford C. Bernstein.

Margin Growth

Versace’s profit margin should widen “significantly” this year, the CEO said. The company, founded by the late Italian designer of the same name in 1978, aims to lift earnings before interest, tax, depreciation and amortization to about 20 percent of sales by 2014, up from 11 percent in 2012, he said.

Ebitda in 2012 increased 15 percent to 44.5 million euros, adjusted for currency shifts, Versace said in a statement today. Revenue advanced 20 percent to 408.7 million euros, with sales at the company’s own stores surging 39 percent.

The U.S. was Versace’s fastest-growing market in 2012 as sales increased 46 percent. Revenue climbed 38 percent in Asia and 7 percent in Europe as the company opened more boutiques.

Revenue from Versace’s directly operated stores reached 224.5 million euros, it said. Wholesale sales gained 5 percent to 149.4 million euros, while revenue from royalties was “steady” at 34.9 million euros.

Rome, Paris

Net income, restated in April 2012 for tax adjustments, rose to 8.5 million euros from 7.9 million euros.

Versace will open between seven to 10 stores in Greater China this year as well as outlets in Brazil, the U.S., Turkey and South Korea, Ferraris said. In Europe, where retail sales rose by a “close to double-digit” percentage in the first quarter, the company will open stores including in Rome and Paris and possibly one or two in Germany, the executive said.

After adding online operations in Europe and the U.S. last year, Versace plans to extend e-commerce to Scandinavia, Australia and possibly China this year, the CEO said.

Donatella Versace and her brother Santo Versace have helped run the 35-year-old company since their brother Gianni’s murder in 1997. Donatella serves as creative director, while Santo is chairman. They own stakes of 20 percent and 30 percent, respectively. Donatella’s daughter Allegra, a non-executive director, owns the rest.

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

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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