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Versace to cut 350 jobs in search of profit

Versace to cut 350 jobs in search of profit

Versace's new CEO said in an interview Wednesday that the fashion house must move quickly on its restructuring plan, including 350 job cuts worldwide, to stanch losses and return the group to profitability by 2011.
Gian Giacomo Ferraris _ who took up his post in July in the family-held fashion house founded in 1978 by the late Gianni Versace _ forecast that Versace's revenues will be down 30 percent for the year 2009, a situation he said cannot continue.
The former CEO of Jil Sanders took a three-year business plan adopted just weeks before his arrival and sharpened it to reflect the continued gloom in the luxury industry _ which Bain & Co. expects to contract 8 percent worldwide to ⁈llion ($228.25 billion) in 2009.
"We are more aggressive because we want to solve the losses immediately, yesterday," Ferraris said in a telephone interview. He said he wants to complete the restructuring by the middle of next year to reach an operating profit by the end of 2010 and a bottom line profit by 2011.
Ferraris also affirmed Donatella Versace's creative control, saying all of the lines Versace's primary asset will be under her direct control.
The restructuring measures include streamlining production, reviewing its store network and reducing capital investments and overhead. Ferraris' goal is to reduce the work force to 960 by the middle of next year from 1,310 now.
Ferraris emphasized that Versace's core businesses will not be cut.
"We will invest in design, product development and brand management," Ferraris said. "All the other areas, infrastructure, support, like bookkeeping, administration, controlling, and any double infrastructure, will be concentrated and rationalized."
Versace is going ahead with plans to open a second new store in Las Vegas later this year as well as new stores in New Delhi, Dubai and the Gold Coast of Australia by the end of the year, Ferraris said, while at the same time looking at closing unprofitable stores. Ferraris expects there will be 89 or 90 stores by the end of the year, dropping to 85 by the mid-2010.
The fashion house last month closed the last of its three stores in Japan, where the luxury industry has been especially hard hit, but Ferraris said the group would look at repositioning the brand there in the future.
"I don't think an international brand like Versace can be out of Japan right now," he said.
Even though Versace recorded a 10 percent increase in orders after the spring/summer 2010 women's wear shows last month, Ferraris said he is not calculating any upside into his reorganization plans.
"The measures we want to adopt need to be realistic, to be sure the company will be safe. This is why we need to move now, and not in one month," Ferraris said.
Versace approved a new three-year plan earlier this year before the departure in June of the previous chief executive, Giancarlo Di Risio, who had joined the privately held, family-run company in 2004 after a ⁈llion debt restructuring package was agreed with banks.
While Di Risio had aimed to launch an IPO, Ferraris said the move is not necessary, thanks to the backing of the Versace family and "normal bank lines" of credit. Gianni Versace left 20 percent of the company to his sister, Donatella Versace, 30 percent to his brother Santo and 50 percent to his niece, Donatella Versace's daughter, Allegra Beck.
"We are in a very healthy family situation, and we are not risking anything," he said.


Updated : 2021-07-30 15:15 GMT+08:00