New article I found this morning on Versace turning brand around.
The Sunday TimesMay 28, 2006
Versace says ciao to bling and excess
A switch to quality and elegance has saved the fashion house and set it on the road to becoming a lifestyle brand, writes John Arlidge from Milan
DONATELLA VERSACE lights up her umpteenth Marlboro Red of the morning and wiggles through the glass doors to her design studio in Milan.
“Don’t constrict the silhouette. Make it looser,” she tells Lorenza Baschieri, her chief womenswear designer, who is pinning a navy blue dress on a model. “I love the volume in the beige pants,”she tells her chief menswear designer, British-born Warren Davis, who is fitting a slouchy suit on another model.
NI_MPU('middle');The platinum-coiffed queen of bling would once rather have revealed her true hair colour than utter the words “loose” or “beige”, but this is a new Versace. After what she concedes have been a “very difficult” few years spent battling her cocaine addiction and struggling to run the business after her brother Gianni’s murder, the most-recognisable face in fashion is back with a new look and a new business plan that is taking the label out of the red and into the black.
Sitting chain-smoking in her Milan studio, Versace cuts a very different figure from the one that disappeared into a rehabilitation clinic in Arizona two years ago to kick her drug habit as her company teetered on the brink on going bust.
She has lost weight and looks younger than her 51 years. A woman famous for getting up “at the crack of lunch” is now in the gym or the swimming pool before 8am. She flits between fittings in Milan, advertising shoots in New York, catwalk shows and meetings with her chief executive, Giancarlo Di Risio, as she repositions Versace as the ultimate Italian luxury lifestyle brand.
“Everything in the business has changed drastically and is in the right place now,” she said, ignoring the plate of canapes and mini-cakes in front of her as if to re-affirm that her days of excess are behind her. “We are going back quicker than we thought. This is a new era of Versace.”
Figures released earlier this month confirm that sales are creeping up like the hemline on a Versace cocktail dress. The firm cut its 2005 operating losses to €5.5m (£3.7m) from €95m the year before. If sales of company assets were included, notably the disposal of the Versace family’s Manhattan townhouse, the label could have declared a pre-tax profit of €37.2m.
Worldwide sales climbed 28% in the first four months of this year. The company’s debt stood at €79m at the end of 2004 but this has now been eliminated. Di Risio said the firm was sticking to its goal of moving back into operating profit in 2007, “but we don’t exclude the possibility that it will happen this year”.
Even for a fashion house whose history has been as dramatic as any Hollywood blockbuster, it is a remarkable reversal of fortune. The label had defined late 20th century “splash and spend” glamour, invented the supermodel and sanctioned outward displays of supremely self-assured feminine sexuality, but in the winter of 2004 it was technically bankrupt.
Outflanked by flashy young pretenders, notably Dolce & Gabbana, annual losses in 2003 rose to €95m on sales of €320m and debt soared to €120m. Insiders concede that the firm was just two months away from going into receivership.
Try as she might, Versace, who was then running the company as well as designing the womenswear and menswear collections, could not come up with a look that captured the essence of glamour in a quieter, more individualistic era.
As critics damned her collections as poor reflections of her brother’s past triumphs, Versace became more and more unpredictable. Her cocaine habit was out of control. She began mixing the drug with sedatives and retreated to her Milan apartment for days at a time. “The situation was a mess, a monster,” she said.
What a difference a couple of years make. Today, not only is the firm approaching profitability for the first time since 2001, there is also talk of a stock-market flotation. The family could use such a move to sell off a chunk of the business to fund fresh expansion. Versace owns 20% of the company, her 20-year-old daughter Allegra owns 50%, and Versace’s brother Santo, who used to run the company with her, owns 30%.
“A stock-market listing was a dream of Gianni’s,” said Versace.
How did she bring the company back from the brink? “We have changed everything and reinvented ourselves. It’s a total change: from black to white,” said the designer as she slid a specially-designed cardboard sleeve bearing the Versace Medusa head logo over the health warning on her cigarette packet because, she said, she finds the warnings “upsetting”. It’s no exaggeration. In two years Versace has unstitched almost every aspect of the business and her own life and re-fashioned it.
She has given up cocaine. She said she has not touched the drug since coming out of rehab. She has cut down on partying and become a 9am to 9pm working girl. She has dumped the “no embellishment is an embarrassment” look popularised by her brother in favour of “a more restrained, more accessible look”.
Out go dresses slashed up to here and down to there and the acid yellow and gold mosaic baroque boutique interiors. In come neutral colours and drapier silhouettes on the catwalk and cream marble floors, light grey walls, lacquered black wood and Antelio crystal in the stores.
“Versace has always stood for sensuality and glamour, but glamour these days is not defined by details and overdecoration but by quality,” she said. “The mood is quieter. I am showing my softer side.”
Critics have praised “the elegant sexiness” of the clothes aimed at the average customer — not rich b*tches on acid.
Most important of all, she has decided to concentrate on design — she is the brand’s creative director — and hand over day-to-day management of the business to Di Risio, who was lured to Versace from the rival Italian label Fendi. However good a designer she is, she concedes she could not run the business.
“After Gianni’s death I was forced to take over everything overnight. I could not control it all. It was too much for one person to have the total vision. We made mistakes,” she said.
In his trademark pinstripe suit and Sven-Goran Eriksson-style glasses, Di Risio, 53, could not be less Versace if he tried. He has proved the perfect choice to force through painful change. Since his appointment two years ago he has changed the entire top tier of management at the company. “There was a management but it wasn’t a competent management,” he said.
Di Risio has refocused on the core luxury business and reversed a policy of expanding into the mass market. The cheaper-end lingerie, swimwear, gymwear and children’s line have all been axed and licences for perfumes, eyewear and watches sold.
He has invested heavily in high-price, high-margin accessories, notably ceramic watches and limited-edition quilted bags, a move that has helped to push accessories sales from 4% of the total two years ago to 20% last year. Handbag sales, which rose threefold last year, are expected to double this year after the company’s decision to open a dedicated handbag factory just outside Milan. Accessory sales are expected to rise to 30% of revenues this year.
Di Risio has also disposed of a number of the indulgences that date from the days when Gianni Versace and Sir Elton John spent too much time together. One of them was Gianni’s mansion in New York, along with all its contents, such as furniture and art by Julian Schnabel, Roy Lichtenstein and Jean-Michel Basquiat. Gianni’s Miami mansion had been sold a few years before — it is now a members-only club.
The result is that the company is out of danger and on track to re-establish itself as the ultimate Italian luxury lifestyle brand by the end of the decade. Although its glitzy high-end rivals, notably Dolce & Gabbana and Gucci, have entered a market segment that Versace once had to itself, Donatella Versace points out that hers is the only label that offers a complete branded lifestyle, comprising clothes, accessories, jewellery, homeware, hotels and travel.
“We sell a unique total 360-degree lifestyle, 365 days a year — an Italian dream,” she said.
And Versace is daring to dream again. Next year she will travel to Dubai to celebrate the opening of the firm’s second branded hotel — Palazzo Versace. Its key features include giant aquariums full of fish imported from the Red Sea and an under-beach cooling system to ensure that fashionistas do not burn their perfectly pedicured feet as they totter to and from the loungers to the pool and back again. Giant fans in an artificial rainforest will waft fine mist particles over the resort to ensure that the temperature never exceeds 30C even when it is 50C outside.
After that she will put the finishing touches to the interior of a private jet — all black and cream leather. Then she will move on to open 12 new boutiques, including one in London’s Bond Street. Finally, she will recreate the edgy Versus line as a stand-alone fashion brand.
Every development will reflect her new, more restrained personal and professional style. “I like the new Donatella,” she said. “She is more consistent, less chaotic.”
But fashion writers and satirists will be relieved to know that one thing Versace will never ditch is her trademark platinum hair and Bikini Atoll tan. “I don’t like natural,” she said. “I don’t believe in totally natural for women. For me, natural has something to do with vegetables.”
And, with that, she flicks her arrow-straight tresses and wiggles back through the glass doors of her design studio to get back to her office. The comeback queen has work to do.
A lifestyle brand that covers everything from chocolate to jets
WHEN Gianni Versace launched his first collection in 1978 and used his sister as a model — he was the first to dye her hair platinum — nobody imagined that the label would become the world’s most luxurious lifestyle brand.
By pioneering brand extension, pushing fashion into new areas such as hotels, apartments, homeware and travel, Versace has become more than just a clothes line.
Today, consumers can — if they really must — ‘live’ Versace 24-hours a day.
They can wake up in Versace sheets in their Versace-built apartment, go to the gym in Versace sportswear, have breakfast in a Versace cafe, sipping cappuccino out of an Versace cup. They can go to work in a Versace suit, wearing a Versace watch. When the day is over they can drink a Versace martini in a Versace bar.
Over dinner in one of the label’s branded restaurants, they can plan their next holiday, taking the Versace-designed jet to a Versace resort on the Gold — where else? — Coast in Australia or in ‘al-Bling’ Dubai. When the last Versace espresso is sunk they can return home to a square of Versace chocolate and their Versace bed. It is a lifestyle Donatella, embraces. Wherever she is in the world, she always dresses top to toe in Versace and never leaves home wearing less than £100,000 worth of Versace jewellery, including a giant yellow diamond ring to remind her of her brother.
http://www.timesonline.co.uk/article/0,,2095-2199994,00.html
