WWD Thursday July 29, 2004
Versace Plans Not Dimmed by Donatella Decision
MILAN ÷ Donatella Versaceâs decision to enter rehab for drug-related issues isnât likely to have a major impact on the company that bears her familyâs name or its plans to seek a minority investor, according to industry observers.
A Versace spokesman confirmed a report in Wednesdayâs New York Post that the designer entered a rehab center last month for substance abuse, but declined to say where.
ãThis is a private matter and we hope the press respects it as such. Itâs business as usual and we look forward to presenting the spring-summer 2005 collection in Milan on Oct. 2,ä he said.
The Versace brand has been built on rock Înâ roll and glitz, and Donatella Versace has epitomized that image as much as anyone, mingling with celebrities such as Madonna, Jennifer Lopez, Beyonc Knowles, Britney Spears and Christina Aguilera and partying in almost every major city around the globe. Known for not crossing the threshold of the Via Ges palace, the companyâs Milan headquarters, until the lunch hour, her high-living style has become so renowned that ãSaturday Night Liveä turned it into a running comic gag, starring Maya Rudolph as the designer.
And fashion and drugs have long been linked, from the days of Halston through to Calvin Kleinâs substance abuse problems. Calvin Kleinâs former chairman Barry Schwartz, who is now chairman of the New York Racing Association, said Wednesday, ãObviously the first step to solving a problem is recognizing it. The good thing is sheâs getting treatment. It will probably make her a better executive because she will be able to function a little bit more.
ãWe went through a difficult time but certainly Calvin came back and stronger than ever,ä Schwartz said.
Schwartz also noted rehab is often a 30- to 40-day treatment, which isnât a great amount of time in the grand scheme of things, especially in large well-staffed organizations. ãIâm sure sheâs got capable people working in the business. Everyone will pull that much harder to cover for her until she comes back.ä
Still, Versaceâs decision to check into rehab comes as the company remains in turnaround mode and shortly after a new shareholding structure took effect. Donatellaâs daughter Allegra Versace Beck turned 18 on June 30 and gained control of the 50 percent stake in the house left to her by her late uncle Gianni Versace, who was murdered in Miami Beach in 1997. The remaining 50 percent is split between Donatella, who owns 20 percent, and her brother Santo, who owns the remaining 30 percent.
The spokesman confirmed Wednesday that Versace is still seeking a minority investor in the house; it has hired Credit Suisse First Boston and Lazard to help conduct the search. The spinoff of Giver, Versaceâs fragrance division, is also imminent. A source confirmed the company would like to emulate the previous long-term licensing formula with Luxottica for eyewear, to infuse cash to improve the debt-equity ratio. Giverâs most likely suitor is Inter Parfums.
Observers said some potential investors in the house could become nervous with the news of Donatella Versaceâs substance abuse, but most believe it wonât have any long-term impact on the process.
Jeffrey Kalinsky, owner of Jeffrey stores, said, ãIf Donatella felt she needed to go somewhere to get help for a problem, thatâs great for business and thatâs great for Donatella. Thatâs a decision of strength and courage. The greatest thing about getting help is knowing you need to.ä
He also noted that many accomplished people have sought treatment.
ãShe certainly isnât the first person in the fashion industry or in any industry ÷ doctors, lawyers, movie stars ÷ who has needed some help,ä Kalinsky said. ãCertainly, there are tons of successful people who have been through similar things.ä
Foxy Brown, who launches a signature fur collection this fall, wished Versace ãa speedy recoveryä and noted how the pressures of this industry have made several falter. She pointed to Mary-Kate Olsen and her ãall-time favoriteä Courtney Love as examples of celebrities who have sought treatment in recent months. But Brown doesnât expect Versaceâs entering rehab to have much bearing on business and said it might even help it.
ãIt makes her more human in a sick way [in consumersâ eyes],ä Brown said. ãBefore if she was ever seen as untouchable, now people will see she suffers like the rest of us.ä
Joan Kaner, senior vice president and fashion director for Neiman Marcus, said the shakeout remains to be seen, but presumed the upcoming collection has been put to bed. She did speculate about how much has been done for production of the runway show and other necessities.
Kenneth A. Wasik, director of the Consumer Products Group of Houlihan Lokey Howard and Zukin, said potential investors will likely be focusing more on the product than the personalities. ãItâs a hiccup, but overall the value is still there. People buying donât know her other than what they read in the paper,ä he said, adding that in the end, he thinks the Versace name will overcome any bad press. ãLuxury designer goods are in such high demand, that probably eclipses any damage done by her.ä
The impact would be significantly greater if Donatella were at the helm of a fashion house with a more mainstream style sensibility, marketing sources said.
ãI donât think it will make a bit of difference ÷ the [Versace] brand is much bigger than Donatella Versace,ä said Drew Neisser, president and chief executive officer of Renegade Marketing Group. ãThe brand is not built on Middle American values. This isnât Disney or a brand that built itself on some kind of social consciousness,ä he added. ã[Consumers will] forgive her. Theyâll probably celebrate her renewal.ä
In addition, brand image guru Marc Gobe observed it would be surprising ÷ and ironic ÷ if a leading-edge fashion label such as Versace saw its brand equity diminish because of Donatellaâs rehab, considering so much apparel has been marketed via models portraying a heroin chic.
Versace was among a trio of European designer labels that entered womenâs top 10 favorite apparel brands in the Brand Keys third annual fashion index this June. Versace ranked fifth, selected by 16 percent of women, as did Chanel and Louis Vuitton.
Brand Keys president Robert Passikoff said Versaceâs recovery period ãdegrades only a small degree of a brandâs strength. People expect that from designers and rock stars. Itâs not the same as a senator doing that ÷ not as deleterious in the world of designers and rock stars.ä
Not surprisingly, Passikoff projected any impact wielded by Donatellaâs presence in rehab on the sale of a minority stake in the house of Versace would be very minor. ãPeople buying into such ventures know what is and is not involved,ä he noted.
÷ Alessandra Ilari, with contributions from Rosemary Feitelberg and Valerie Seckler, New York
Versace Plans Not Dimmed by Donatella Decision
MILAN ÷ Donatella Versaceâs decision to enter rehab for drug-related issues isnât likely to have a major impact on the company that bears her familyâs name or its plans to seek a minority investor, according to industry observers.
A Versace spokesman confirmed a report in Wednesdayâs New York Post that the designer entered a rehab center last month for substance abuse, but declined to say where.
ãThis is a private matter and we hope the press respects it as such. Itâs business as usual and we look forward to presenting the spring-summer 2005 collection in Milan on Oct. 2,ä he said.
The Versace brand has been built on rock Înâ roll and glitz, and Donatella Versace has epitomized that image as much as anyone, mingling with celebrities such as Madonna, Jennifer Lopez, Beyonc Knowles, Britney Spears and Christina Aguilera and partying in almost every major city around the globe. Known for not crossing the threshold of the Via Ges palace, the companyâs Milan headquarters, until the lunch hour, her high-living style has become so renowned that ãSaturday Night Liveä turned it into a running comic gag, starring Maya Rudolph as the designer.
And fashion and drugs have long been linked, from the days of Halston through to Calvin Kleinâs substance abuse problems. Calvin Kleinâs former chairman Barry Schwartz, who is now chairman of the New York Racing Association, said Wednesday, ãObviously the first step to solving a problem is recognizing it. The good thing is sheâs getting treatment. It will probably make her a better executive because she will be able to function a little bit more.
ãWe went through a difficult time but certainly Calvin came back and stronger than ever,ä Schwartz said.
Schwartz also noted rehab is often a 30- to 40-day treatment, which isnât a great amount of time in the grand scheme of things, especially in large well-staffed organizations. ãIâm sure sheâs got capable people working in the business. Everyone will pull that much harder to cover for her until she comes back.ä
Still, Versaceâs decision to check into rehab comes as the company remains in turnaround mode and shortly after a new shareholding structure took effect. Donatellaâs daughter Allegra Versace Beck turned 18 on June 30 and gained control of the 50 percent stake in the house left to her by her late uncle Gianni Versace, who was murdered in Miami Beach in 1997. The remaining 50 percent is split between Donatella, who owns 20 percent, and her brother Santo, who owns the remaining 30 percent.
The spokesman confirmed Wednesday that Versace is still seeking a minority investor in the house; it has hired Credit Suisse First Boston and Lazard to help conduct the search. The spinoff of Giver, Versaceâs fragrance division, is also imminent. A source confirmed the company would like to emulate the previous long-term licensing formula with Luxottica for eyewear, to infuse cash to improve the debt-equity ratio. Giverâs most likely suitor is Inter Parfums.
Observers said some potential investors in the house could become nervous with the news of Donatella Versaceâs substance abuse, but most believe it wonât have any long-term impact on the process.
Jeffrey Kalinsky, owner of Jeffrey stores, said, ãIf Donatella felt she needed to go somewhere to get help for a problem, thatâs great for business and thatâs great for Donatella. Thatâs a decision of strength and courage. The greatest thing about getting help is knowing you need to.ä
He also noted that many accomplished people have sought treatment.
ãShe certainly isnât the first person in the fashion industry or in any industry ÷ doctors, lawyers, movie stars ÷ who has needed some help,ä Kalinsky said. ãCertainly, there are tons of successful people who have been through similar things.ä
Foxy Brown, who launches a signature fur collection this fall, wished Versace ãa speedy recoveryä and noted how the pressures of this industry have made several falter. She pointed to Mary-Kate Olsen and her ãall-time favoriteä Courtney Love as examples of celebrities who have sought treatment in recent months. But Brown doesnât expect Versaceâs entering rehab to have much bearing on business and said it might even help it.
ãIt makes her more human in a sick way [in consumersâ eyes],ä Brown said. ãBefore if she was ever seen as untouchable, now people will see she suffers like the rest of us.ä
Joan Kaner, senior vice president and fashion director for Neiman Marcus, said the shakeout remains to be seen, but presumed the upcoming collection has been put to bed. She did speculate about how much has been done for production of the runway show and other necessities.
Kenneth A. Wasik, director of the Consumer Products Group of Houlihan Lokey Howard and Zukin, said potential investors will likely be focusing more on the product than the personalities. ãItâs a hiccup, but overall the value is still there. People buying donât know her other than what they read in the paper,ä he said, adding that in the end, he thinks the Versace name will overcome any bad press. ãLuxury designer goods are in such high demand, that probably eclipses any damage done by her.ä
The impact would be significantly greater if Donatella were at the helm of a fashion house with a more mainstream style sensibility, marketing sources said.
ãI donât think it will make a bit of difference ÷ the [Versace] brand is much bigger than Donatella Versace,ä said Drew Neisser, president and chief executive officer of Renegade Marketing Group. ãThe brand is not built on Middle American values. This isnât Disney or a brand that built itself on some kind of social consciousness,ä he added. ã[Consumers will] forgive her. Theyâll probably celebrate her renewal.ä
In addition, brand image guru Marc Gobe observed it would be surprising ÷ and ironic ÷ if a leading-edge fashion label such as Versace saw its brand equity diminish because of Donatellaâs rehab, considering so much apparel has been marketed via models portraying a heroin chic.
Versace was among a trio of European designer labels that entered womenâs top 10 favorite apparel brands in the Brand Keys third annual fashion index this June. Versace ranked fifth, selected by 16 percent of women, as did Chanel and Louis Vuitton.
Brand Keys president Robert Passikoff said Versaceâs recovery period ãdegrades only a small degree of a brandâs strength. People expect that from designers and rock stars. Itâs not the same as a senator doing that ÷ not as deleterious in the world of designers and rock stars.ä
Not surprisingly, Passikoff projected any impact wielded by Donatellaâs presence in rehab on the sale of a minority stake in the house of Versace would be very minor. ãPeople buying into such ventures know what is and is not involved,ä he noted.
÷ Alessandra Ilari, with contributions from Rosemary Feitelberg and Valerie Seckler, New York
:
ÊCheck the Donatella photos at the women's forum, under the Crystal Noir thread. ÊObserve her makeup. Looks like Pablo Picasso might have helped 'do' Donatella's face . . .
