Newspaper article St Louis Post-Dispatch (MO)

Very Versace: Italian Designer Is Making America No. 1

Newspaper article St Louis Post-Dispatch (MO)

Very Versace: Italian Designer Is Making America No. 1

Article excerpt

SURE, HE already outfits Sly, Liz and Madonna, but now Gianni Versace wants to dress a lot more of America.

The house of Versace, which has charted a steady expansion path since its founding 16 years ago, is now zeroing in on America, and its goal is to make the United States its No. 1 export market.

"The U.S. is our leading priority right now. It has to become our biggest export market," says Santo Versace, Gianni Versace's older brother and the chairman of the family fashion house, in an interview in his Milan headquarters.

Judging from the enthusiastic comments of American retailers after Versace's October presentation of the spring/summer '95 collection, which they praised as one of his most salable, the company appears to be making its move to a receptive audience.

But amid all the optimism, the Versaces were smarting from a recent stinging article in a respected British newspaper, The Independent.

The article, a wide-ranging cover story on the Versace empire, has the company threatening legal action.

In addition to taking a decidedly skeptical view of the clothes themselves, the article questioned the business viability of the fashion house, asking whether its revenues are really enough to support its expensive, star-studded image, its expanding chain of boutiques, and what it described as the extravagant lifestyle of Versace and his friends, moving among Milan, a villa on Lake Como and his new home in Miami.

The Versace chairman dismissed the article as "false and tendentious" and says the company's legal office may file charges against the magazine.

Versace, meanwhile, says his firm is charging ahead with its plan to bring the U.S. market up to more than 30 percent of total sales.

Versace's plans include founding a U.S. subsidiary by early this year to coordinate distribution - now handled directly from Italy; boosting relationships with leading retailers and specialty stores; revamping the fragrance business; and, perhaps most ambitious, seeking a listing on the New York Stock Exchange.

Plans for that are still moving forward, Versace says, although he hasn't yet given a mandate to a merchant bank to handle the listing.

The choice is between Barclays Bank PLC, where the Versaces have close contacts in Milan, and an unidentified U.S. investment bank.

"I want them to really want this mandate, and they're going to have to work for it," Versace says.

Also, Versace says the company is gearing up its internal financial reporting procedures in preparation for Securities and Exchange Commission requirements.

He says the firm has been certifying its balance sheets since 1986 and plans to go ahead with the listing in 1995 or 1996.

"They are at a good point," confirms Gian Marco Petrelli, general director of Barclay's Milan branch. "It's a successful, profitable company that is capable of taking a step like this."

This step, which would make Versace the first top Italian designer to go public, is all the more reason why the design house was upset by the article in The Independent.

The Independent said, "There is confusion about how the numbers add up." However, the article didn't attempt any analysis of costs and revenues and made reference to "frequent rumors . . . that Versace is somehow linked to the Mafia," although it never supported the allegation or even directly addressed the issue.

"The combination of gangster clothes, wildly extravagant lifestyle and near-empty shops only fuels the curiosity of those who ask how he makes his money," reads one sentence.

The article also raised questions about the purpose of Versace's Dutch holding company, Gianni Versace International NV, although it is commonplace for international firms to establish holding companies in the Netherlands and Luxembourg to take advantage of favorable corporate and fiscal legislation. …

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