NEW YORK — With new senior management and a major strategic shift in place, Versace is positioning its U.S. business for substantial growth.
The Milan-based company’s chief executive officer, Giancarlo Di Risio, who joined in 2004, has identified the U.S. as a key market. Versace has made several moves recently to regain its foothold in America, which, despite its high brand profile, was said to have been underperforming in the last few years.
For the first time, the company will direct sales, distribution, marketing and communication of its main ready-to-wear and accessories collections from its Fifth Avenue headquarters. In previous years, the lion’s share of direct management was out of Milan.
In addition, effective this month, the U.S. arm of the company is taking in-house the sales and distribution for Versace Jeans Couture from IT Holding unit Ittierre, its licensee that handled those aspects of the collection from its U.S. offices.
The structure will be managed by Patrick Guadagno, president of its U.S. subsidiary, who was poached in May from D&G, where he was managing director. Guadagno has a strong apparel background and understanding of the U.S. market. Before D&G, he was president at IT Holding USA. He also spent 12 years as president of Giorgio Armani’s Le Collezioni men’s and women’s collection, and five years as president of Calvin Klein Collection men’s, both under licensee Gruppo Finanziario Tessile.
“Milan has prioritized the U.S. as a strong target for growth,” Guadagno said last week. “We are getting great collaboration [from Milan] in positioning ourselves here to be competitive in the right way. It will be the first time in the history of the company that all products will be managed and directed from the U.S. office.”
Guadagno added that market conditions are currently favorable for such a strategic shift. Versace’s U.S. wholesale business is up about 32 percent, and the company is registering strong sell-throughs at retail, which could result in growth at the wholesale level. In the U.S., Versace is sold in about 68 doors, including Saks Fifth Avenue, Barneys New York, Neiman Marcus and Nordstrom. He said primary markets for growth are regions such as Los Angeles, south Florida, San Francisco and Las Vegas.
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Since Guadagno’s arrival, the company has improved its logistics, investing to improve service and delivery, which had been problematic in the past. “The deliveries were absolutely not competitive,” Guadagno conceded.
From a product point of view, the collection has become more focused and commercially viable, with less emphasis on ornamentation, which should bode well in the U.S., particularly some of the less daring geographical regions.
“We will address the consumer’s needs more in a modern, sportswear-driven way and definitely the way she shops — faster with certain components that really attract her,” he said. “We will maintain the luxury customer, and there will be a reach to a new customer through the product direction and the marketing.
“We will open up to more high-end specialty stores as well as move out of primary markets into secondary markets, because we will have that mix of merchandising and product assortment to reach out to that customer,” he added.
Guadagno said the company had started the search for a senior executive to run the women’s business for rtw and accessories, and hopes to fill that very soon.
Versace is also looking to revitalize the Versace Jeans Couture label and make it more competitive in the red-hot contemporary market. Beginning Dec. 1, the company officially took over sales and distribution, though Ittierre will continue manufacturing the line.
“That gives us a complete offering here,” Guadagno said. “Now that we have restructured and reorganized, we have a much greater opportunity to manage the business and the brand.”
The line is distributed in up to 150 doors, including Saks Fifth Avenue, Bloomingdale’s and many contemporary-driven specialty stores. Versace Jeans Couture, he added, could easily grow its distribution to 250 to 300 stores.
“The contemporary segment is the most competitive, fast-turning category and has the quickest rate of growth,” Guadagno said. “In order to be a player there, you really have to operate by the formula.”
Guadagno said the company closely will study the product assortment and its balance between each product category.
“We are going to evaluate ways to offer more product with a quicker turn on the floor,” Guadagno added. “The first thing we will do is to really assess the product offering, and really expand upon it and offer more product on a more frequent basis to address the turn. We will also identify some of the key drivers that we believe really set the trend, so we can get back in with the opportunity to react.”
For the six months that ended June 30, Versace’s revenue totaled 149 million euros, or $192.2 million at the average exchange rates for that period.
Versace will not renew its production and distribution pact with IT Holding for Versus, which expires in January. The company is determining whether to produce it in-house or with a new manufacturing partner.
To better serve the strategic changes for the main collection and Versace Jeans Couture, the company soon will redo its U.S. showroom to reflect the more toned-down aesthetic of the brand, as well as make space for Versace Jeans Couture and its sales team. Administration and back-office support will eventually move to a Midtown location.
“We will be taking that additional space here for what we believe is a great way to operate from a sales and marketing point of view,” Guadagno said.