Can House of Versace Survive Murder?
Born to a poor dressmaker in southern Italy, Gianni Versace grew up to be proclaimed “the king of frock ‘n’ roll.” His multimillion-dollar fashion empire featured glitzy shows, astronomical price tags and roaring profits on the worldwide sale of trendy clothes, perfume and accessories.
His fatal shooting in Miami on Tuesday deprived Italy of a rags-to-riches icon and his family-owned company of its creative genius. As it shut its palatial Milan headquarters in mourning, Gianni Versace SpA faced the question: Can it survive without Gianni Versace?
A fortune is at stake. Versace’s company has grown every year since his first fashion show 19 years ago--a success story that, along with Giorgio Armani, helped make Italy a world leader in designing stylish clothes for men and women.
And for the rich and famous. Those mourning the 50-year-old designer with the neat gray beard included VIPs who had elevated him to celebrity by donning his flamboyant creations. Princess Diana was “devastated,” pop star Boy George “heartbroken.”
“Gianni Versace, together with a handful of names, symbolizes the success of Italian fashion all over the world,” Armani said, adding that his rival’s death “has left me in a state of shock.” A fashion show on Rome’s Spanish Steps featuring top international models was postponed in a gesture of mourning.
Versace’s global empire reached from its design operation in Milan to a production network across Italy and more than 165 boutiques from Tokyo to New York’s Fifth Avenue. Its accessory branches include Gianni Versace Profumi--makers of Versace L’Homme and other fragrances--and Versace Make-Up, the company’s recent venture into the beauty business. There also are 23 Istante stores carrying his less expensive line.
For all his celebrity-courting and globe-trotting--he had palatial homes in Milan, Como (Italy’s lake country), New York and Miami Beach--Versace claimed to thrive on his sensitivity to the mass market. “The roots of Italian success are mainstream people,” he recently told Time magazine. “In Italy, you have to relate to real people, while in France the designers seem to relate only to transvestites on the [fashion show] runways. We may have less fantasy, but we’re more realistic.”
It was a lucrative formula. Sales rose 23.5% last year to $485 million, 80% of it from sales abroad, in addition to $530 million in licensing income. The company reported $40 million profits after taxes.
But Versace SpA remained largely in the hands of three people--Gianni, his brother, Santo, and sister, Donatella. Some industry specialists say the company suddenly looks vulnerable. “A lot of the value in Versace is tied up in Gianni himself--not exactly a one-man show, but he was very much the front man,” said Paul Gordon, a luxury goods analyst at the Italian brokerage house IMI Sigeco.
Versace’s death is expected to delay a long-awaited move by the family to restructure and become a public company with shares listed on the Milan and possibly the New York Stock Exchange next summer. Santo Versace, the chairman and managing director, once explained that by going public, the company would “automatically acquire a second and third generation . . . a commitment to carry Versace beyond its founders.”
Santo and Donatella have two children each.
Industry analysts say investors should watch fashion shows over the next year for clues to the company’s ability to carry on.
Versace staged a show in Florence last month, bringing out a men’s collection. His couture collection for women was shown in Paris last weekend.
“His influence will be in that next collection,” said Michael Swift, a management consultant for Kurt Salmon Associates in Milan. “The collection to watch is the one after that--the first one he won’t have a hand in.”
Some fashion critics say Donatella is capable of stepping into her brother’s shoes. She already designs the company’s successful Versus line and is credited with inspiring some of Gianni’s more outrageous looks. “When you have a really strong business and a designer with the same name, I think there’s a very real chance that, even if they lose a step or two, they’ll continue just fine,” Swift said.
Other Italian fashion houses have shown an ability to move beyond calamity. Designer Franco Moschino’s company persevered after his death from AIDS 10 years ago, and the Gucci empire survived the fatal shooting of its founder’s last grandson, Maurizio Gucci, on a street outside his Milan office in 1995. Five people, including the victim’s first wife, have been arrested in the murder.
Santo Versace is appealing a May conviction for bribing tax inspectors in 1990. His brother was not accused in the case.
Times fashion editor Mimi Avins in Los Angeles contributed to this story.
