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Versace Empire's Fate Up to FamilyBy Sharon Walsh
Washington Post Staff Writer
Thursday, July 17, 1997; Page C03
NEW YORK, July 16 Fashion designer Gianni Versace was the man out front receiving the applause for the couture line at his show in Paris just two weeks ago. But at his April show here, he sat in the audience next to Courtney Love while his sister took the runway walk.
As the fashion and financial worlds assess the impact that the violent death of the 50-year-old Italian designer will have on his fashion empire, the talk inevitably turns to his sister, Donatella Versace Beck, and brother, Santo Versace, who were partners in the business.
"It is a family business. It always has been," said a spokesman for Versace here. "But today it's more a family than a business."
Gianni Versace had a 45 percent stake in the business, his brother a 35 percent share and his sister a 20 percent share. But the family business relationship isn't described entirely by the percentages; the two siblings played an important role in the creation of Versace as a brand that is recognized globally in areas from high fashion to jeans and table linens. The company had sales of $505 million in 1995, and estimates of 1996 revenue were at least $550 million.
"It has the best shot of any family-run business in Italy to be a colossus between now and the millennium," said Alan Millstein, a retail consultant.
Donatella, the platinum blond sister, does not give her age (published reports say 42) and is known only by her first name in fashion circles. She has taken on more design responsibilities at the company in the last five years, in part because of Versace's recent bout with cancer of the ear. She produces the company's Versus line of clothing a less expensive line aimed at a younger customer and was the creator of the company's Blonde fragrance line. Her husband, Paul Beck, oversees the menswear line.
Santo Versace, 53, a business administration graduate from Messina University, has run the financial side of the family business since 1976. In an interview last month with the European, a newspaper, he predicted that the firm would have a 10 percent increase in profits this year and noted that the company was planning to offer stock to the public on both the New York and Milan stock exchanges next year.
Versace planned to use the money to expand the company, an idea that would have interested investors because of the strength of the Versace global brand name. (American designer Ralph Lauren's public offering of stock last month raised $767 million, illustrating Wall Street's passion for glamorous fashion stocks.)
But financial analysts said that the public offering likely will be put on hold for a season to give potential investors a chance to assess the prospects of the company without its leader.
"The burden of proof will be on the company," said Faye Landes, a retail analyst with Smith Barney Inc. "They have to demonstrate that they can continue their success without him."
The future of Gianni Versace SpA, the holding company for the family business, is likely to be sorely tested in the years ahead, despite its strong family support and deep pockets. The question of who will replace the design genius of Versace himself is the most troubling issue. Unlike Lauren, who has a design staff of 180, Versace's signature lines, which account for about 45 percent of the company's profits, were his own creation.
But other fashion houses have survived the loss of top designers. And Versace can afford to buy the best talent in the world, fashion experts said.
What is not clear is whether another designer can produce clothes with Gianni Versace's bright colors and bold designs that attracted Hollywood stars and the world's fashion elite. They were not for the faint of heart. Nor were the prices, which could run up to $2,000 for a woman's suit or $4,000 for one of Versace's signature leather bomber jackets. Versace's Fifth Avenue store, shuttered today, attracted women who ride in private planes and limousines, not those who ride subways.
Versace's fashion house has faced trouble squarely in the past. In May, a Milan judge found Santo Versace, along with designers Giorgio Armani, Gianfranco Ferre and Krizia's Mariuccia Mandelli, guilty of bribing tax authorities. The judge sentenced them to suspended 14-month terms.
Santo Versace admitted paying $260,000 to tax auditors, but said that he and the others were victims of a widespread extortion racket by government officials in Italy.
Staff writer Robin Givhan and staff researcher Richard Drezen contributed to this article.
© Copyright 1997 The Washington Post Company