In Decline, Versace Seeks Balance

2009-11-18 (수) 12:00:00

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By GUY TREBAY

“I am a survivor,” the designer Donatella Versace said matter-of-factly during a recent blitz of New York, a visit that made it appear little had changed in the world of the occupationally fabulous.

But her composure, like her company’s Medusa logo, was a mask. Two days after Ms. Versace left New York to attend the Fashion Rocks concert in Brazil, Gianni Versace S.p.A., the family-held company over which she presides, announced that it would cut 26 percent of its worldwide work force, as many as 350 jobs. It projected a loss of $45 million in 2009 and no return to profitability before 2011.

Versace is suffering from the sharp rejection of luxury goods by consumers around the globe. In early October, the company announced the closing of its three Japanese stores, an abrupt departure from a once-lucrative market entered in 1981 .

“In business you cannot just dream about the economy returning, something nobody in the world is saying for sure will happen,” Gian Giacomo Ferraris, Versace’s new chief executive, said by telephone from Milan. “A responsible person has to face reality and act according to reality,” he added. “But Versace also, as a fashion company, needs to go back to being a trendsetter in creative terms.”

The worldwide market in luxury goods has declined 10 percent since 2007, to a projected $221 billion, according to the business consultants Bain & Company.

The recession has hurt independents like Versace, which has faced the added challenge of reclaiming territory ceded to designers who poached on its market. In many ways, Dolce & Gabbana, Roberto Cavalli and others built their brands by adapting Versace’s formula of frank eroticism, high-profile stunts and a strategy of enlisting celebrities to act as glamorous advertisements. Yet, as Ron Frasch, president and chief marketing officer at Saks Fifth Avenue, noted, there are “very few brands in the world that have that kind of name recognition and customer loyalty.”

How successfully Versace will ride out the current crisis is a matter not only of how well its restructuring works but also of how balanced its offerings are “from a price point of view,” Mr. Frasch said. Like its competitors, Versace will have to retain its luxury aura while attracting new consumers with more affordable goods. “Versace always serviced a much broader range of consumers than people would believe,” Mr. Frasch said. “And it remains a very valid brand.”

That this is so is owed substantially to the efforts of a designer perhaps better known for her vices and cosmetic surgeries than for the creative influence she exerts on a label her brother began in the mid-1970s. When the house’s founding designer, Gianni Versace, was killed 12 years ago, Ms. Versace was put into a position she says she never desired. Working with her brother for years as an adviser and muse, Ms. Versace was “always happier in the background,” she said.

Yet Ms. Versace has not only sustained the label creatively but helped make it profitable.

Business may never return to the days when consumers indiscriminately snapped up label bags and shoes. “But you have to face the truth,” Ms. Versace said, whether seeking sobriety or reinvention in the global marketplace. “For me, life is about chapters,” she said .

“Die and born again, die and born again,” she said, striking a match. “It’s the story of my life.”

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