June 4, 2009

Versace CEO could be out of fashion by Friday

By Ram
Gianni Versace SpA CEO Giancarlo Di Risio has had a good four-year run at the company, reviving it from financial peril. But now, with sales slipping and conflict with Donatella Versace intensifying, Di Risio may be out of fashion at Versace, with media reports indicating he may resign by Friday.

It's likely that the Milan-based company's first-quarter sales slipping 13% from a year earlier will be blamed for his departure. But, in Di Risio's defense, the fashion industry -- especially the luxury high-end sector -- has been feeling the pain of the global economic slowdown as even well-to-do consumers are cutting back on spending. Christian Lacroix SNC, for example, fell into insolvency proceedings last month.
Despite public denials of boardroom friction, Di Risio's expected exit likely lies in the strained relationship he has with Donatella Versace, who is the company's creative director and 20% owner as well as the beloved sister of the tragically slain founder Gianni Versace.

The CEO has objected to her lavish lifestyle, especially when it involves company money, according to recent articles in the Italian media, including Il Sole 24 Ore. One spat involved Di Risio criticizing the creative director's hiring of a photographer at a rate of €100,000 ($140,000) for an ad campaign, according to Bloomberg. Things came to such a boiling point that the board reportedly considered firing him last month.

Many would argue that Di Risio saved Versace from the fate of Christian Lacroix. Di Risio worked with Donatella Versace to make the collections less flashy and more profitable.

"Di Risio did a good job of turning Versace around and positioned it well," Carlo Pambianco, a Milan-based fashion industry consultant, told Bloomberg. "Versace can't try to compete with larger brands, such as Armani or Gucci. He established its own niche."

Di Risio's replacement is already being floated around. The Telegraph reports Kim Winser, who was behind the resurgence of Scottish brand Pringle and recently resigned from Aquascutum, as a possible candidate. As for Di Risio, the former Fendi chief executive likely won't stay unemployed long. - Gerald Magpily.

Reference : http://www.thedeal.com

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