MILAN--Gianni Versace SpA on Thursday reported a bumper set of
full-year earnings, with profit lifted by soaring sales in all
markets.
Chief Executive Gian Giacomo Ferraris said that the brand's
potential is finally coming through after four years of
restructuring the company, which was close to bankruptcy in 2004. A
revival of the brand under Mr. Ferraris's tutelage helped convince
private-equity firm Blackstone Group to pour EUR210 million ($288.9
million) into the Italian fashion house, buying a 20% stake in
February. The deal left the family of founder Gianni Versace, shot
dead in Miami in 1997, with the majority of the house and the final
word on its business and creative direction.
Mr. Ferraris, who became CEO in 2009, said that the real benefit
of the Blackstone deal will be evident only next year, although
sales are expected to rise by double digits in 2014. "This year
will be devoted mainly to investment, so the real impact of such
investments will come next year particularly, but also in 2016," he
said in an interview.
Yet, despite strong growth, the fashion house--with a sexy style
that is popular with celebrities such as Jennifer Lopez and
Angelina Jolie--remains a minnow compared with competitors such as
Prada SpA and LVMH Moët Hennessy Louis Vuitton SA. But it plans to
expand by opening stores in emerging markets and broadening its
product offerings, with a goal of nearly doubling its revenue by
2016.
Operating profit, adjusted for currency movements, rose 60% in
2013 compared with the previous year, to EUR71 million. "The rise
in (operating profit) is an important result," said Mr. Ferraris,
adding that it was the fruit of improvement in the company's supply
chain, among other changes.
Net profit grew 28% in 2013 compared with the previous year, to
reach EUR10.9 million. Revenue totaled EUR479.2 million, up 17%
from last year, with sales in the U.S. and Asia up 32% and 19%,
respectively.
Sales in China grew 13%--slower than in previous years. "You
can't always grow 30% each year," said Mr. Ferraris. "But the
country is still under-penetrated, so we hope to continue growing
there." Mr. Ferraris said the slower growth in the area is due to
the general economic conditions and changing habits in consumers'
spending in China.
Versace is the latest of a number of European brands signaling a
slowdown in China. In February, Gucci's parent company, Kering SA,
said its sales were down 2.1% at EUR3.56 billion last year, as
weakness in China took its toll. Several other high-end drinks and
luxury-goods companies have seen sales drop in the past year as a
Chinese anticorruption campaign curbed lavish state banquets and
gift giving among officials and executives.
In Russia, the Italian fashion house doesn't operate stores
directly so it doesn't fear any fallout on its revenue due to the
current political crisis there. "Yet we already saw few months ago
that the situation in Ukraine was difficult, so we have been
cautious there," Mr. Ferraris said.
In 2013, the company's main line of products accounted for
around 60% of total sales, while sales of fragrances and watches
grew 24% and 16%, respectively. Sales through directly operated
stores were up 19% compared with the previous year, while wholesale
sales grew 17%.
Versace said it invested EUR24 million in retail expansion and
e-commerce last year.
Write to Manuela Mesco at manuela.mesco@wsj.com
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