This week it was revealed that Versace, the Italian luxury fashion brand, is selling a 20% stake to Blackstone, the US private equity firm, for $287 million.

This week it was revealed that Versace, the Italian luxury fashion brand, is selling a 20% stake to Blackstone, the US private equity firm, for $287 million.

By gaining backing from the private equity firm, Versace is reportedly aiming to open new shops and expand internationally with the ultimate aim of launching an initial public offering.

This is sure to be a step in the right direction for family-owned Versace. The fashion house suffered declining revenues and near bankruptcy following the death of Gianni Versace in 1997, but has since a made a comeback, returning to profit in 2011.

Versace is probably hoping to use this investment to replicate some of the success that other luxury retailers have had in markets such as Asia, where the demand for luxury goods remains strong.

Fellow Italian luxury brand Prada, for example, recently posted a rise in sales of nine per cent, which was largely attributed to a strong performance in the Asia-Pacific region.

In order to truly revive the brand, however, Versace will need to work hard to distinguish itself from other luxury brands.

This will not only involve improving its image, but also developing its online presence, which will be crucial in helping to reach new international markets such as China where online shopping is at its highest.

After all, in this 21st century retail industry, there is no point in having a strong brand if you don’t have the ecommerce offering to match.  With the help of Blackstone’s investment and insight, Versace should be able to make improvements in all of these areas and more.

With Blackstone only taking a minority stake in the business, it will be interesting to see how much power the firm has to direct these changes.

Indeed, Versace has made it clear that it does not want to relinquish full control of the brand, with the chief executive Gian Giacomo Ferraris stating that “the vision is to maintain independence”.

But, if the retailer truly wants to achieve its aim of listing on a global stock exchange, along with all its ambitious international expansion plans, it may need to let go of some control.

One could argue that remaining in the hands of its founders may actually have hampered Versace’s expansion thus far – and that private equity could be the catalyst that is needed to take the business to the next level. 

  • Dan Coen, director, Zolfo Cooper

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