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Versace sees boost in China

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Italian fashion house Versace, is expecting to post higher sales in 2010 on the back of its restructuring and China`s growing appetite for luxury goods. The brand is said to be confident about a return to profitability in 2011, thanks to a more efficient distribution network and brand repositioning.

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Varsace is being optimistic about 2010, and have raised their revenue target to 280 million euros from 270 million euros. Their sales fell to 268 million euros ($352 million) last year.

Versace, whose evening gowns have been worn by film stars Drew Barrymore and Penelope Cruz and pop diva Madonna, is undergoing an overhaul after being hit hard by the downturn. China, where Versace debuted in 2002, has become the group`s biggest market, followed by Europe and the United States.

“We expect China to account for 35 percent of turnover in five years from actual 25 percent,” said Gianni Ferraris, Chief Executive, Varsace. Analysts expect luxury spending to increase to $14.6 billion in the next five years in China, making it the world`s leading luxury market.

The Medusa-logoed group plans to open new stores in Beijing and Shanghai by early 2011, Ferraris also added that, while traditionally it has been a menswear market for Versace, it was seeing increased sales of womenswear.

The release of Versace`s first-half results in September will prove a key test of Ferraris` corporate after one year with the luxury brand. He was formerly at fellow luxury goods brands Jil Sander and , before being hired to join Versace. He said he expects retail sales to rise around 9% to 130 million euros in 2010, with wholesale picking up in the third quarter, and with the last three months of the year to remain stable.

After founder `s death in 1997, his sister and designer, , now owns the company with her daughter Allegra and her brother Santo, and has increased her influence over the company`s creative direction. Ferraris said the family had been approached by several investors but was neither considering selling or floating the company at the moment. “They want to remain independent for now,” he said.

Big luxury groups such as PPR, and Hermes have posted first-half results above forecasts, indicating a rebound in the luxury sector worldwide.