No brand is immune to the luxury slowdown in China, but Versace is still on pace for double-digit growth this year.
Despite some rocky times from the death of founder Gianni Versace in 1997 and the 2007 global financial crisis, Versace’s chief executive, Gian Giacomo Ferraris, is leading the company with a steady hand.
Ferraris was in Hong Kong recently for the opening of its new Asian flagship store in Hong Kong’s Harbour City mall. The 720 square meter store takes up three floors and cost €5,000 per square meter, according to Financial Times.
Regarding China growth, Ferraris told the Financial Times, “If you’re saying it was 38 percent growth and now it’s not, then yes, we are affected. But China is becoming about organic growth, it is something that is capitalising. Before [growth] was investing in new shops, and now … the growth is coming organically, which is more profitable.”
Ferraris has almost doubled sales since his arrival in 2009, and sales surged by almost 33 percent in 2013. While sales were below expectations this year, the company is generating more sales from its existing stores.
Many other luxury brands have been affected by the Chinese government’s anti-corruption crackdown, but Versace doesn’t see that as the reason for slower sales.
“We are a fashion, luxury and lifestyle brand. Anti-corruption is more about watches, jewelry, and spirits, and we have never been a brand of reference for gifting,” Ferraris said.
As a vote of confidence in Versace’s business, US private equity firm, Blackstone, invested €150 million earlier this year. Combined with the €60 million in shares the company had bought from Versace family members, Blackstone now owns 20 percent of the Italian fashion company.
Versace is using the capital to invest in its other lines, including Versus Versace, and to expand its store network.
The company, which has been in China for 14 years, will re-enter Japan after leaving the country in 2009. New stores are also planned for South Korea, and Versace has partnered with casino magnate Stanley Ho to develop the Palazzo Versace hotel in Macau.
Ferraris sees the Blackstone investment as the first step on the path to an eventual IPO.
image credit: flickr/andrew.tann