WALL STREET JOURNAL | STACY MEICHTRY
ROME -- Gianni Versace SpA Chief Executive Giancarlo Di Risio is expected to resign, a person familiar with the matter said, after months of clashes with lead designer Donatella Versace over how to cut costs at the Italian fashion house.
Mr. Di Risio plans to tender his resignation in coming days, this person said. It was unclear how the Versace family, which owns 100% of the fashion house, would react.
A spokeswoman for the company declined to comment and said Ms. Versace wasn't available for an interview.
The Versace family issued a statement Thursday saying that "the professional relationship between Versace and its CEO" hasn't been terminated. Versace is focusing on "measures it should adopt to confront the effects of the economic downturn on the luxury sector," the statement said.
Ms. Versace owns a 20% stake in the company, which was founded by her brother, the late Gianni Versace. Her brother Santo Versace owns 30%. Ms. Versace's 22-year-old daughter, Allegra Versace Beck, owns 50%. Ms. Beck has backed her mother in the designer's clashes with Mr. Di Risio, the person familiar with the matter said.
A resignation by Mr. Di Risio, which would come as Versace's profit is suffering, would highlight the pressure faced by Europe's many family-owned fashion houses. Such companies are suffering more than their larger, financially sturdier peers amid the global economic slump.
Many of these family businesses in recent years have brought in professional executives to restructure their operations and help them grow.
Yet the belt-tightening has proven too painful for some. Brian Blake in April stepped down as chief operating officer and commercial director of Prada SpA, which is owned by the designer Miuccia Prada and her husband, Patrizio Bertelli. Mr. Blake had been tapped in 2007 to prepare Prada for a stock-exchange listing that never came to pass.
Mr. Di Risio and Ms. Versace, both 53 years old, have been at odds for months over how to reduce costs for such items as promotional events and parties, according to the person familiar with the matter.
Even in good times, the question of how much to spend on public events and advertising campaigns is a source of tension between executives who want to control costs and designers eager to generate buzz. With the global downturn crimping profits, CEOs are under even more pressure.
"It's going to be a fine balance for CEOs to balance budgets while maintaining the public face of the company and the exposure that it costs," said Robert Burke, a luxury-industry consultant.
Ms. Versace and her brother Santo took over the fashion house in 1997 after Gianni Versace was gunned down outside his Miami villa. Mr. Versace's death sent the fashion house into a financial spiral as customers loyal to the late designer's styles began to look elsewhere.
When Mr. Di Risio was brought in to run Versace in 2004, the company was saddled with more than $146 million in debt and posted a net loss of $124 million. Ms. Versace, backed by her daughter, gave the executive a free hand to restructure the company.
Mr. Di Risio began by untangling the company's assets from the family's personal holdings, which included a Manhattan town house that the family sold in 2005 for $35 million.
Mr. Di Risio closed unprofitable lines, such as lingerie and children's wear, and focused on overhauling Versace flagship stores in fashion capitals including New York, London and Milan. He also opened new stores in fast-growing luxury markets, such as China.
Under Mr. Di Risio, Versace also formed joint ventures that extended the Versace brand to Lamborghini sports cars and AugustaWestland helicopters.
Ms. Versace, known for her bleach-blond hair and sexy dresses, embraced Mr. Di Risio's commercial focus, reining in the brand's flashy designs for more restrained styles that have longer shelf life. She also began to concentrate on designing accessories, such as handbags and shoes, which generate greater profit margins.
At times, however, relations between Mr. Di Risio and Ms. Versace, who is vice president of the board, became strained. Initially, for example, Ms. Versace tried to persuade Mr. Di Risio to revive the house's tradition of mounting high-profile, but costly, fashion shows for the designer's haute couture collection. Mr. Di Risio talked her out of the idea, persuading Ms. Versace to present her collections to clients in private appointments.
By 2006, Mr. Di Risio's strategy had returned the fashion house to profitability, posting earnings of €19.1 million ($26.3 million). Versace's profit has slipped since, however. The fashion house last year reported sales of €336 million and scratched out a net profit of €9 million, down from €13 million a year earlier.
As profit fell, tensions rose. In January, Mr. Di Risio began to push Ms. Versace to simplify her designs so that the label could lower its prices, the person familiar with the matter said.