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March 27, 2012 3:45 pm
Gianni Versace, the Italian fashion house known for its high-wattage glamour, has returned to profit after a three-year hiatus, underlining a turnround at the brand after it almost collapsed during the financial crisis.
Net profit at the fashion house led by Donatella Versace, sister of murdered designer Gianni, rose to €8.5m last year, up from a loss of €22m in 2010.
Earnings before interest, tax, depreciation and amortisation, a crucial measure of strength in the fashion industry, rose 73 per cent to €38.7m.
Gian Giacomo Ferraris, chief executive, who has masterminded the turnround alongside Ms Versace, said sales to emerging markets, especially Greater China, had driven growth last year.
However, he said he was confident of a longer-term return to profitability after a surge in like-for-like sales in the US, where Versace makes some 15 per cent of its total business, in the first three months of this year.
Versace is aiming to achieve double-digit growth over the next three years.
The upbeat forecast echoes strong results from luxury goods groups for last year, but comes amid some concerns that the industry could face a slowdown this year as the economies of emerging markets stall.
Mr Ferraris, a former executive at Prada, Gucci and Jil Sander, told the Financial Times he was “cautiously optimistic,” as he saw opportunities for the brand to build its resilience to economic shocks by expanding across product lines and geographies.
He also ruled out a sale of the fashion house, and said the family, who include Ms Versace’s daughter Allegra, were keen to keep it independent at least for the next few years.
Versace came close to becoming the most high-profile casualty of the financial crisis after the brand and its creative force Donatella Versace, now 56, lost their way in the decade after the murder of Gianni Versace in 1997.
Its turnround under Mr Ferraris, who joined the company in 2009, has seen Versace follow the model of Giorgio Armani, where a ready-to-wear collection provided the starting point for the creation of a luxury goods empire that now spans haute couture, hotels and restaurants.
Creating a “luxury lifestyle group” has become a common theme in the industry as it is considered a more resilient business model.
Versace launched its own haute couture line, Atelier Versace, in Paris in January, to critical acclaim. It started a children’s wear line, Young Versace, which Mr Ferraris said was showing “strong growth,” and brought Versus, its younger line, back into the main group after a series of disastrous licensing agreements.
Mr Ferraris sees its high-margin accessories business accounting for 45 per cent of total sales at its top lines, up from 30 per cent today.
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