Versace announces crisis cuts

It announced a cost-cutting plan to axe around 350 of its 1300 workforce and review branches and investments as part of a "comprehensive corporate reorganisation," but gave no further details.

It said it aimed to return to profit by 2011, after the recent downturn sapped demand for its upmarket clothes, handbags and sunglasses.

"Trading conditions in the wake of the global financial crisis have been severe and the company expects to make a loss in 2009," Versace's chief executive Gian Giacomo Ferraris said in the statement, without giving a figure.

He insisted that the Versace brand had strong growth prospects, however, saying that artistic director Donatella Versace's latest spring and summer collection had made a buzz last month at Milan Fashion Week.

The group announced earlier this month that it had closed three stores in Japan, a key market for luxury goods, which recently re-emerged from a recession.

Its former chief executive Giancarlo di Risio left in July in what the group called a "mutual" decision. Press reports had cited a disagreement with Donatella Versace.

The fashion house denied rumours that she had opposed cost-cutting measures imposed by the manager to combat the current financial downturn.

Her brother Gianni Versace, known for designing glamorous and sexy outfits, was murdered in Miami in 1997, aged 51.

Di Risio was appointed in 2004 to restructure the business, which had been in crisis since the murder, and managed to restore the company to profit over the next few years until the global crisis hit.

Source: AFP

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