From the Ashes; A New Versace

With the Versace and H&M collaboration launching tomorrow, I look at the rise and fall of one of Italy’s most famous designer brands, and ask whether Versace can ever rebuild itself into the brand it used to be.

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(Image courtesy of Versace)

    By Franziska Hensel

As a brand, Versace have seen it all; from the hedonistic highs of the eighties and nineties, staggering success, fame and money, only to fall to murder, drugs, suspected mob ties, near bankruptcy with the loss of assets and a dwindling relevance in the world of fashion. It is a big change from a company that in the mid-nineties was valued at €739 billion. How the mighty may have fallen, but with Christopher Kane at the helm at the brand’s sister collection Versus and the collaboration with Swedish high street giant H&M launching in less than a week, are their fortunes finally changing?

The humble beginnings of Gianni Versace and his eponymous label are nothing new; he was the younger son of a poor family from Calabria in the south of Italy. His father was a merchant and his mother a dressmaker who owned her own shop. He grew up fascinated by his mother sewing, and after he studied architecture he moved to Milan to start his own label. Success came quick and fast for the talented designer, for he tapped into a market that hadn’t been utilised in Italian fashion before. While fellow rivals such as Giorgio Armani and Valentino focused on chic clothes with a restrained elegance, Versace’s pieces were bright, garish and a huge hit with the nightclub scene. Gianni himself confessed to being inspired by Italian hookers for his early collections a far cry from the sophistication of the brand Gianni considered his rival; Armani. The phrase often thrown around about the two rivals was that “Armani dressed the wife and Versace dressed the mistress”. Though many editors of the world’s fashion press considered them tacky, they were bright and looked great in magazines and store windows. Added to his rising star power and celebrity friends, Versace made tacky cool and enviable and the profits came flooding in.

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(Image courtesy of AP/Lionel Cironneau)

What happened next is no secret either; on a bright sunny morning Gianni was murdered on the steps of his Casa Casuarina mansion in Miami after his usual walk along South Beach. The shooter was later revealed as 27 year-old Andrew Cunanan, and he was found eight days later after a nationwide manhunt, having committed suicide on a houseboat in Miami. Investigators later ruled that he had shot himself with the same gun that killed Gianni and the case was considered closed by the police. Though there were conspiracy theories floating around after his death of suspected mob ties, it wasn’t until late 2010 and the publication of a book by a respected Italian investigative journalist who interviewed two reliable informers for the N’drangheta mob that the theory took on some form of respectability. The Italian police anti-mafia force even opened a case to look into these fresh claims.

The Versace family rallied around one another after the murder, always having been a close-knit family, and it was decided that Gianni’s younger sister and often-times muse would take over creative control rather than hand the reins over to an outside designer. Santo, Gianni’s older brother inherited 30 per cent of the company and became CEO, while Donatello inherited 20 per cent and the other 50 per cent was left to Donatella’s daughter Allegra. She was the apple of her uncle’s eye, who often called her his ‘little princess’. While the decision made perfect sense at the time, in hindsight it led to the near destruction of the brand. Donatella developed a serious drug addiction soon after the death of her brother, which she had denied for many years until recently. Coupled with a new aesthetic for the brand and her often drug-induced rage, erratic decisions were made that not only frightened of customers, but investors and buyers too. In the seven years after Gianni’s murder Versace was dropped by Nieman Marcus and Bergdorf Goodman to name a few. The company that used to hold so much clout among the fashion and celebrity circles had lost its prestige. Other brands began to fill the void that the Versace designs used to hold; Dolce & Gabbana were doing sexy and Roberto Cavalli was bright and youthful.

By 2004 the company had reached a new low; Donatella went to rehab for addiction to cocaine and after suffering heavy losses for seven years, the company flirted with bankruptcy. Upon her return, Donatella agreed a change was in order. Santo, who had stepped down a few months previous finally agreed to a new CEO in the form of Giancarlo di Risio, who set about restructuring the company in an effort to cut costs and return the company back to a profit. It would take another five years and the replacement of Gian Giacomo Ferraris, former CEO of Jil Sander for the company to make any sort of headway. By that point many conceded that it was too late for the company; profits were dwindling around €295 million, less than half of what the company had made at the height of its power with Gianni at the helm. Then disaster struck in the form of the banking crash of 2008, which led most economies into a global recession. Not even the fashion world was safe from the turmoil as several companies such as Rock & Republic, Christian Lacroix and Escada to name a few filed for bankruptcy. By 2009 things had gotten so bad that Versace reported a loss of €49.6 million for the fiscal year. Risio was out and Ferraris replaced him, dramatically cutting costs and scaling back the entire company. By 2010 the company was making a profit of €22.3 million and the forecast for the future sees it aiming for a target of €520 million by 2014.

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(Image courtesy of H&M)

The H&M collaboration could be said to be coming at the right time. Finally back in the black, the company is seeking to use the H&M brand and wide audience to once again return attention to the Versace brand. While it might not be the most obvious choice for a luxury brand whose image depends of exclusivity and clout to partner with a mass-market such as H&M, it has worked in the past for brands such as Missoni, Lanvin and Sonia Rykiel. This limited collection is sure to bring in enough revenue to drive their sales up to €200 million for 2011. Together with the continued flourishing of Versus, originally an afterthought in the Versace brand, it has grown from strength to strength over the past two years with British fashion darling, Christopher Kane at the helm. Due to the shelving of many of Versace’s sideline projects over the years, Versus is filling in the gap needed for a fashion label to market itself as a brand.

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(Image courtesy of W Magazine)

Versace is a long way away from the powerhouse brand of the eighties and early nineties, but it is making headway. The Versace of 2011 is a leaner, more frugul version of the brand that Gianni ruled. Maybe that is a good thing. The fashion world too has changed from what it was in the eighties and nineties. With the world still recovering from the banking crash three years ago, companies do not have the luxury to be lax with the brand or spend money as frivolously as they used to do. Versace surely will not die so easily; they have hung on since Gianni’s murder and I highly doubt that a little recession will stop them from conquering the fashion world once more.

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