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Versace's Latest Plan: U.S., Accessories Keys To Breaking Even in '07

Versace chief executive officer Giancarlo Di Risio said losses widened and revenue dropped in 2004, but predicted the firm would break even in 2007.

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Di Risio stressed that an energized, focused post-rehab Donatella Versace has helped the company churn out a more sophisticated and "exploitable" product range. Fall-winter 2005 wholesale sales are up 53 percent overall and up 38 percent in accessories specifically.

One of Di Risio's key moves since becoming ceo was cutting back on the proliferation of Medusa heads adorning products of both the signature collection and the diffusion lines. Now only top-line goods carry that unmistakable trademark and Di Risio said that was an important step toward safeguarding the brand's cachet.

"Versace is one of the very few companies that has a symbol as strong as the Medusa," he said. "But you have to know how to exploit it."

As for debts, Di Risio said they stand at 80 million euros, or $100.7 million at current exchange rates, down from the 127 million euros, or $159.8 million, as of his arrival last September. He said the goal is to reduce debt to less than 40 million euros, $50.3 million, by the end of the year.

"Already as of today we can no longer talk about the company having an at-risk situation in terms of debts," he said.

Versace will see its 2005 and 2006 revenue drop as the company's sales-generating base changes, said Di Risio. At the same time, losses will start to narrow, allowing the company to break even in 2007.

Versace sold its watch and beauty businesses in late 2004, which will bite into 2005 numbers, Di Risio said. Revenue in 2006 will suffer as Versace decides the fate of its secondary lines, he added. Already Versace has canceled its women's Versace Classic line and replaced the men's with a new higher-positioned brand known as Versace Collezioni, making its debut for the fall-winter 2005 season. Licenses with IT Holding for Versus and Versace Jeans Couture expire in 2007.

It has been unclear whether Versace wants to cancel the Versus line. Traditionally shown on the runway in tandem with the main Versace collection, the company has cut the diffusion line from fashion shows the past two seasons. Di Risio said there are no plans to end the line but also indicated that efforts aren't being channeled there.
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