With profits and sales climbing at Gianni Versace SpA, the question arises again: When will it go public?
The answer: not just yet. Good - look at what happened to Prada.
As the fashion house on Thursday reported growth in net profits and sales in 2012, Gian Giacomo Ferraris, its chief executive officer, repeated there are no immediate plans to take Versace public or sell a stake. But he set a target for when that might happen: when the company hits sales of 500 million to 600 million euros, or $641.2 million and $770 million at current exchange.
The company will open three new stores between this month and May in São Paulo, Curitiba and Rio de Janeiro in Brazil, which it entered with its own branch at the end of last year. Just how much the company can or should grow is top of mind for Ferraris and the Versace family, who tapped Goldman Sachs and Banca IMI as advisers last year to look at ways to add help fuel expansion. While no answer is definite yet, noted Ferraris, “the Versaces have every intention of staying on as owners of the firm. They are aware that the more the company grows the more it is their duty to explore ways to be competitive against larger fashion conglomerates.”
Siblings Santo and Donatella Versace hold 30 and 20 percent stakes, respectively, and Donatella’s daughter, Allegra Versace Beck, owns 50 percent of the firm. As he charts the company’s growth strategy, Ferraris said he also will continue to “educate the company to transparency,” and has begun to book numbers on a monthly basis in 2013.
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Investments in retail and increases in the U.S. and Asia helped lift profits by 7 percent in the year ended Dec. 31 to 8.5 million euros, or $10.8 million, from 7.9 million euros, or $10.9 million, in 2011. (Tax adjustments obliged the company to restate the latter figure in April 2012 from 8.5 million euros.)
Group revenues climbed 20 percent to 408.7 million euros, or $523.1 million.
Dollar amounts have been converted at average exchange for the periods to which they refer.
“There was a sleeping giant under the ashes,” said Ferraris, whose restructuring helped return the company to the black in 2011.
In an interview at the company’s headquarters here, Ferraris underscored his pride in the growth of the signature line in terms of both ready-to-wear and accessories, while noting investments of 25 million euros, or $32 million, last year to expand the company. In comparison, Versace invested 15 million euros, or $20.8 million, in 2011 and 5 million euros, or $6.6 million, in 2010.
“Last year we set in motion important projects, such as e-commerce, new beachwear and innerwear lines, the Young Versace collection and Atelier Versace, and invested in growing Hong Kong, China, Malaysia, the U.S., Europe and Brazil. Now we will reap the rewards,” said Ferraris, who expects double-digit growth in the next three years. “The year 2013 has started in an encouraging way, with retail revenues in the first quarter up more than 20 percent,” he added.
The company has grown more than 50 percent over the last three years.
In 2012, earnings before interest, taxes, depreciation and amortization, adjusted for currency movements, rose 15 percent to 44.5 million euros, or $57 million.
Retail sales for the year were up 39 percent to 224.5 million euros, or $287.3 million, while wholesale revenues grew about 5 percent to 149.4 million euros, or $191.2 million. Royalties were in line with the previous year at 34.9 million euros, or $44.6 million.
Sales were evenly split between the men’s and women’s divisions.
Ferraris described Versace’s product offer as “more complete now,” and the new store concept introduced in New York in October is the “new way to communicate it.” A new boutique modeled after this blueprint, conceived by Donatella Versace and English architect Jamie Fobert, will open in Paris “in a few days,” said Ferraris, as well as a 4,320-square-foot unit in Rome near the Spanish Steps in September, and one door in Venice this year.
Ferraris touted a “fantastic response” to the brand in the U.S., which was also boosted by the men’s formal wear and accessories categories. In the U.S., a market that last year showed 46 percent growth and accounted for 15 percent of revenues, the company plans to open a store in Orlando, Fla., and “probably” Chicago in 2013. There are currently 11 stores in the area.
