Versace Lifts 2010 Forecasts as Nine-Month Sales Rise
Gianni Versace SpA, the Italian fashion company that has dressed celebrities including Jennifer Lopez and Gerard Butler, increased its full-year revenue and profit forecasts after reporting higher nine-month sales.
Revenue in 2010 will exceed 280 million euros ($387 million), Chief Executive Officer Gian Giacomo Ferraris said today in a phone interview, more than a January forecast of 270 million euros. Earnings before interest, taxes, depreciation and amortization will reach at least 18 million euros, he said, compared with a previous forecast of 13.3 million euros.
Since joining the closely held company in July last year, Ferraris has closed a factory, reduced the workforce by about a quarter and discontinued businesses such as designer cars and helicopters. The CEO is also repositioning Versace around clothing and accessories.
“This is paying off and I am sure that by the end of 2011, the company will have definitely acquired the wherewithal to guarantee profitability and solid growth,” the CEO said today. Versace is “above” its plan to be profitable at a net income level in 2011, Ferraris said.
Sales through September advanced to about 249 million euros, Ferraris said. Ebitda reached 6.4 million euros in the six months ended June from 1 million euros a year earlier, he said, declining to provide a nine-month figure.
“It’s a significant improvement” particularly as Versace closed its operations in Japan last year, Ferraris said. Versace plans to re-enter the country in 2011.
Versace, which was founded by the late Italian designer of the same name in 1978, posted a 49.6 million-euro operating loss in 2009, nearly double its estimate, on 37.8 million euros of restructuring costs, the company said in June.
Donatella Versace and her brother Santo have helped run Milan-based Versace since their brother’s murder in Miami in 1997. Donatella is chief designer, while Santo is chairman. They own 20 percent and 30 percent of the company, respectively. Donatella’s daughter Allegra owns the remaining 50 percent.
The family has “no intention for the medium term” of selling the company, Ferraris said today, adding that net debt “is far below” 70 million euros.
“The potential to grow Versace is inside the company,” he said. “We do not need to open 20 shops to grow. In 2011, we will have significant growth with our existing network.”
Versace, which has 88 directly operated shops, plans to unveil a new store concept in Shanghai by the beginning of 2011, before rolling out the new design in primary locations such as Milan and Paris, Ferraris said.
“Due to the economic crisis, they have slowed down on this process,” Ferraris said of the development, which was expected to be completed by the end of 2010.
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