Where the runway meets the street

This week it was reported that for the first time in many years, Italian luxury brand Versace reported a profit of about 12 Million USD for the fiscal year 2011. That is great news, right? Well, in the short term it might be, but in the long term we are not exactly sure.

Founded in 1978, the brand opened their first store in Milan the same year. Gianni Versace was soon one of the hottest names in fashion, dressing actors and other public figures around the globe. The Versace brand became a household name throughout the late 80s and mainly the 90s. Then suddenly Gianni Versace was shot dead in front of his Miami mansion in 1997. The brand is since then headed by his sister Donatella Versace and has had financial troubles for the last 10 years already. Today the brand still operates 82 boutiques around the globe and has a series of different fashion lines, for women, men, kids and the home.

Looking back at the financial troubles of the brand, the news of a profit last year are of course good. The brand’s much hyped collaboration with Swedish fast fashion retailer has brought the brand back into the news and back on the radar of the fashion market. The two brands have produced a Holiday 2011 Collection and a Spring 2012 Cruise Collection, both selling out in no time at H&M stores around the globe. The motivation for brand’s to enter such partnerships with H&M is always different – Lanvin and Comme des Garcons needed more mainstream appeal, and Versace just needed PR in general.

Versace has a history with show business and once again has come back in recent months with lots of success in the hip hop world. We have seen Kanye West, Nicki Minaj and others wear the collaborative H&M line. The question is if Versace is really back?

To be honest, we do not think so. If you look at continuously successful luxury brands, they usually manage to do two things – produce timeless high quality goods and/or they manage to reinvent themselves over and over again, adapt to new market situations to stay interesting for the consumer. Versace has not done either of these, but they simply got lucky. After a long time, the market finally came in their direction again. After years of subtle fashion, the simpler the better, suddenly bold and colorful fashion statements were allowed again and asked for. With that trend, Versace was suddenly again in demand, because bold they have always done better than anybody else.

What that means though, is that when this trend is over, Versace will be thrown out of the closet again. That’s how we see it. Would you agree?

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