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Versace chief executive officer Giancarlo Di Risio said that 2004 marked a turning point for the company. Although losses will widen and revenue will drop in the full-year results Versace is slated to release next week, Di Risio said it's all just part of the restructuring process as the company works toward the goal of breaking even in 2007.
"This is a historic transformation from a family-run company to a manager-run company. We are abiding by the same principles as a publicly listed company," he told WWD, characterizing fiscal 2004 as the end of an "unhappy period for Versace."
Di Risio also confirmed widespread speculation that Versace has scrapped its plan to sell a minority stake in the company. For now, Versace is targeting financial stability. Only in 2007 at the earliest can the company decide whether it wants to link up with an investor or pursue an initial public offering, he said.
"Our priority is to bring the company into a state of equilibrium," he said.
Di Risio could not be drawn out on specific figures for 2004, but financial sources estimate Versace's sales will fall 20.6 percent to 320 million euros, or $396.8 million, while its net loss will widen from 26.5 million euros, or $29.7 million, in 2003.
(Dollar figures have been converted from the euro at average exchange rates for the periods to which they refer.)
In 2001, the last year the company turned a profit, revenue totaled 510.3 million euros, but sales have dwindled each year since then. Last year, Allegra Beck Versace, Donatella's daughter and Gianni's niece, turned 18 and inherited full control of her 50 percent stake in the company, marking a shift in power and a new era at the company she owns along with her mother and her uncle, Santo.
Di Risio emphasized Versace is making progress, correcting problems of late deliveries, producing more focused and commercially viable collections and chipping away at its debts by selling off assets like the watch and beauty businesses, which it subsequently licensed. Recent appointments in the U.S. create a structure to "reconquer" that market, he said.