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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"Right now we are focusing on the top line," he said.

Di Risio said he's banking on sales growth from 2006 onward by expanding the still small accessories business and increasing the flow of royalty income from licensed products such as watches and fragrances. Versace sold its Swiss watch division to Timex and its beauty arm, Giver, to Euroitalia and then struck eight-year licensing deals with the respective buyers for those products.

Versace will also get royalty proceeds from the world's second Palazzo Versace Resort, which will open in Dubai in 2008 (see related story below). The firm already operates a six-star resort on Australia's Gold Coast, stocked with Versace products — from furniture to bath gel.

The fashion house has said for years it wants to grow its still-minimal presence in accessories and Di Risio reinforced this priority. He said the firm has stopped considering accessories as mere companion pieces to apparel but rather as underexploited territory. Currently accessories comprise just 4 percent of Versace's revenue, but Di Risio said that could rise to as much as 30 percent in the future.

In particular, Versace is working to boost the accessories presence in its stores as it renovates retail spaces to a new concept featuring black lacquered panels, white leather furnishings and gold detailing. Stores on Milan's Via Montenapoleone and New York's Fifth Avenue will be the first to incorporate these design elements. Workers are putting the finishing touches on the Milan boutique, which houses a first floor dedicated entirely to accessories.

The company tapped Rocco Magnoli, one of the original architects of the New York flagship, to help modernize his original creation. Gianni Versace was particularly passionate about the New York store, which opened in 1995, just a couple of years before the designer's death. Di Risio said renovations on the New York store are slated to begin this August.

"The Fifth Avenue store is particularly special because Gianni really wanted it," the ceo said.

Di Risio highlighted how recent appointments in the U.S. are sure to grow Versace's business there. Currently the U.S. generates only about 11 percent of Versace's revenue.

Earlier this month, Versace named Patrick Guadagno, an alumnus of Dolce & Gabbana's D&G, as U.S. president and chief operating officer of the wholesale division. The firm also tapped former Fendi executive Roberto Lorenzini to head up the retail business, giving him an analogous title.
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