March 15, 2008

High-end Versace unhurt by downturn

MILAN - VERSACE'S high-end position in the luxury market means the Italian fashion house is not feeling the impact of a global economic slowdown, said chief executive Giancarlo Di Risio.

In an interview on Thursday, Mr Di Risio said the design house, which is seeking to make Asia its second biggest market in terms of turnover after Europe, had registered growth in the first 21/2 months of this year.

'We are positioned in the high end...we do not feel the effects of the economic slowdown,' Mr Di Risio said.

He added that Versace clients are not traditionally those who feel the effects of such a crisis.

'If the price of petrol goes up, a client of Ferrari won't not buy a Ferrari because petrol is more expensive. It will be some other buyer who will be affected.'

Investors are closely watching the United States market for a slowdown in premium spending with consumers rattled by the credit crisis and falling financial markets.

The world's largest luxury goods group LVMH - which spans fashion houses Louis Vuitton and Christian Dior and boasts brands such as Dom Perignon for champagne - has said a mild US recession would have a 'limited...even non-existent' impact on the group, thanks to demand elsewhere.

As far as Versace was concerned, Mr Di Risio was similarly unworried.

'The first 21/2 months registered growth and therefore we are not worried.'

He added Versace posted sales of 310 million euros (S$667 million) last year and cash of 4.4 million euros.

He did not give a net profit figure. The fashion house, owned by Ms Donatella Versace, her brother Santo and her daughter Allegra, swung to a net profit of 19.1 million euros in 2006.

Versace is investing 45 million euros to strengthen its presence in Asia and will open 11 new stores this year.

It will open nine stores in the region at locations in Hong Kong, Macau, Taiwan and China, and two in Europe, including a home furnishings store in Milan.

'The objective that we have for this year is to put Asia in second place after the European market,' Mr Di Risio said.

'We are concentrating on the Asian territory to develop growth in a market that is destined to have a greater weight in the world.'