Versace Scores Profit in 2011; Predicts Double-Digit Revenue Rise in Next Three Years

The house of Versace has returned to profit after several years of red ink at its bottom line.

Gianni Versace SpA, the operating company of the Milan brand, announced Monday night, March 26, that it had posted a net profit of 8.5 million euros, or $11.3 million at current exchange rates, in the calendar year of 2011. That healthy profit compared with a loss of 21.7 euro million, or $28.9 million, in 2010, in other words over a thumping $40 million turnaround in the bottom line.

Versace was also able to trumpet that the house's revenues leapt a sturdy 16.4 percent to 340.2 million euros, or $454 milion, in 2011, compared with sales of 292.3 million euros, or $391 million, in 2010. Verasce's 2011 turnover was buoyed by the house's re-entry into the Japanese market and the introudction of a new line, Young Versace.

“We are very pleased with these strong results. When we announced the company’s restructuring in 2009 we forecasted a return to profit by the end of 2011 on modest revenues growth. We far exceeded those expectations,” said CEO Gian Giacomo Ferraris in a company release.

Image wise, 2011 was also an important year for the house, as Donatella Versace won huge international attention, and solid royalty reveunes, from the brand's link-up with global fast retailing giant H&M. The lady designer followed that up with a critically acclaimed return to haute couture, a much admired presentation of Atelier Versace in Paris this past January.

Nonetheless, Versace's revunes from royalties slipped 35.9 million euros, or $47.9 million, from 38.1 million euros, or $50.8 milion, a year earlier, a six-percent fall due to Versace taking back control of the license to Versus, its diffusion collection, as part of a long-term strategy to fully control its ready-to-wear business.

“These results confirm the global appeal of the Versace brand, and the success of our strategy that is based on core Versace values of great design, leading edge fashion, strong brand management, and impeccable execution,” said CEO Ferraris, who added that Versace is targeting double digit sales growth for the next three years.

In other good news, Versace trumpeted its manageable debt load, something which troubled this famed label in the past. Dynamic cash flows meant that the house both increased capital expenditure and reduced net indebtedness, which stood at 29.5 million euros, or $39.4 million, at the end of 2011, or less than one-tenth of total turnover, which by current fahion industry standards is quite modest.

Finally, retail sales, generated through Versace directly operated stores, rose 17.3 per cent to 161.7 million euros, or $215.8 million, last year, while wholesale sales gained 22.5 percent to 142.6 million euros, or $190.3 million, further underlining the house's newly healthy condition.

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