The following article was originally published in DNR on December 12, 2005.

New York – After a notable absence from U.S. retail, Versace’s men’s runway collection is back, and its newly organized American division is spearheading a push to reestablish all of its brand’s collections by taking direct control of their distribution.

On Dec. 1, close to 85 percent of Donatella Versace’s South Beach-inspired spring collection arrived in select Saks Fifth Avenue and Neiman Marcus stores. The collection, chock-full of Versace signature printed silk shirts cut in a slimmer, more mode4rn fit, marked the return of the men’s collection to the designer floors of U.S. department stores after a decade.

“It was the right time for Versace,” said Michael Macko, men’s fashion director for Saks. “There’s really nothing [in the designer market] that compares to it. It truly does have a niche.”

Saks bought the Versace Collection for its Bal Harbour, Fla and Manhattan stores, while Neiman Marcus si selling it in Las Vegas, San Francisco and Beverly Hills. Both retailers will feature a look from the collection in their spring catalogs.

The small victory for Versace, which is undergoing a major restructuring aimed to return the company to break-even by 2007, is just the first step in a multi-layered plan to rebuild the men’s business in the U.S.

“In fashion it all stems from the top,” said Patrick Guadagno, the recently appointed President and COO of Versace USA’s wholesale division. “To position [our runway collection] in what I believe are the best stores in America in primary markets is certainly a strong start.”

Guadagno, who started with the company in May, jointly oversees the Versace business in the U.S. with Roberto Lorenzini, president of Versace’s retail division. Before their respective arrivals, Versace managed the U.S. market from its headquarters in Milan.

At its height, Versace men’s represented close to 55 percent of the company’s total business. Following the death of Gianni Versace, the collection systematically faded from the U.S. and shrunk overall. Today, men’s represents less than 40 percent of worldwide sales, according to Versace CEO Giancarlo Di Risio. Guadagno declined to give a percentage for men’s U.S., but it’s reported to be far less than that.

“Men’s is a fresh canvas, and to turn it around we need to start from the top” Guadagno said. And while the runway collection is important for brand recognition, he believes Versace Collection is where the bulk of sales will come from for Versace’s men’s business.

Versace Collection, launched for fall 2005, replaced the now-defunct Versace Classic line; however, the secondary line failed to make a mark in the U.S. “Up until now, [Versace Collection’s] product offering had not been right for the U.S. market,” said Guadagno.

To remedy the situation, the fashion veteran immediately went to work to resolve fit and styling issues. He then insisted that Versace Collection, manufactured by Veze, a joint venture between Versace and Ermenegildo Zegna, be produced entirely in Italy rather than in scattered countries as previously done.

The redesigned tailored clothing collection, which retailers start previewing this week, is more consistent in terms of quality and fit. Suits, cut slightly slimmer, start at $995 retail and cap out at $1,595. Guadagno said the real emphasis would be in the $1,095 to $1295 range.

“We’re targeting a new customer with Versace Collection,” said Guadagno. “This is the guy who thinks modern, is in shape, is looking for a silhouette that is sexy, and at the same time he can wear it as tailored clothing and feel right about it.”

New to the fall/winter 2006/2007 offering is a complete line of woven shirts, which will retail between $175 and $295, and sport coats, $695 to $895.

Guadagno said his first-season target for Versace Collection is between 40 and 60 doors, both specialty department stores. He would like to reach 200 doors in the next three years.

The final prong in Versace’s new wholesale strategy is to take control of U.S. distribution of Versace Jeans Couture starting with the fall 2006 collection.

Until Dec. 1 it had been distributed by its licensee, IT Holding. The Italian manufacturer will continue to produce the diffusion line and distribute in all markets outside the U.S.

Guadagno guided a similar project while at Dolce & Gabbana where he oversaw the transition of marketing and sales of its D&G label from IT Holding to its own showroom.

“We have to position Versce Jeans Couture competitively in the contemporary sportswear zone,” Guadagno said. “That’s where it belongs. It’s not a denim-based line—there’s a denim offering, but it’s a sportswear line.”

As he did with Versace Collection, Guadagno is working directly with Versace in Italy to establish price points, assortment and delivery schedules to make the collection a “player in contemporary and denim.”

Versace’s other diffusion line, Versus, is also in a transition period. As reported, Versace said it would not renew its Versus license with IT Holding when it expires in January. Di Risio said the company would present a strategy for the secondary line in February or March.

Versace is on track to break even by 2007. Earlier this year it said it should narrow its losses to 15 million euros, or $18.5 million, in 2005, while sales are expected to drop 6.3 percent to 300 million euros, or $369 million.






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