Yesterday Versace reached an agreement with unions in Italy to move forward with cutting 350 jobs, or about 26 percent of its workforce, by June. The cuts are part of CEO Gian Giacomo Ferraris's plan to stop bleeding money. He expects operating losses for 2009 to total $42 million, while he estimates sales fell about 19 percent. Ferraris also plans to close down Versace's three-year-old accessories factory in Milan (though about 37 of those employees will be relocated to Versace's separate ready-to-wear plant). Accessories being the bread and butter of luxury labels, Ferraris said the cuts won't mean a reduction in accessories production, and expects accessories to generate 40 percent of revenue this year, up 5 percent from last year.
Ferraris reiterates in Bloomberg the sentiments of many buyers so far this year, which is that 2010 probably won't be much better than 2009. Not until 2011 does he expect to "break even on the bottom line."
Under Ferraris, Versace also launched a lower-priced line for fall called Versace Collection, which is 30 to 40 percent cheaper than the main line. Meanwhile, the label continues to operate other lines, including Atelier, consisting of custom dresses retailing for upwards of $22,000; the signature collection, which includes menswear and womenswear starting at around $1,100; and Versus, designed by Christopher Kane, which starts at around $280.
Aside from clothing, Versace is, putting its name on just about everything one could use for living large. They're opening a hotel-residence in Dubai, naturally, which should be completed by the end of the year. Ferraris said the label was also looking into another opportunity in this vein, but wouldn't say where. Branding hotels and yachts and palaces were the same strategy the sheikh who almost bought Christian Lacroix planned to use to turn that label around. Versace also recently launched a cell phone, which will cost more than Dior's $5,000 cell phone. They also may relaunch beachwear and underwear in 2011.
Sounds like they've got all their bases covered: clothing lines, living quarters, electronics. All they're missing is toilet paper! And maybe they should license the T-shirt pictured here, the latest by artist Christopher Sauvé (buy yours here beginning March 1). They've already admitted Versace needs saving. They may as well make a buck off it.
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