Italian fashion house Versace expects to post higher sales in 2010 on the back of its restructuring and China’s growing appetite for luxury goods, its chief executive said.

 In an interview with Reuters, Gian Giacomo Ferraris said he remained confident about a return to profitability in 2011, thanks to a more efficient distribution network and brand repositioning.

 “We are optimistic about 2010, we have raised our full-year revenue target to 280 million euros from 270 million euros and are on track to meet it,” the 53-year-old Ferraris said.

 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.

 Sales fell to 268 million euros ($352 million) last year.

 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,” Ferraris told Reuters Insider television.

  Analysts expect luxury spending to increase to $14.6 billion in the next five years in China, making it the world’s No. 1 luxury market.

  The Medusa-logoed group plans to open new stores in Beijing and Shanghai by early next year, Ferraris said, adding that, while traditionally a menswear market for Versace, it was seeing increased sales of womenswear.

Key Test

 The release of Versace’s first-half results in September will prove a key test of Ferraris’ corporate strategy, after one year in charge.

 Ferraris was formerly at fellow luxury goods brands Jil Sander and Gucci, before being hired to join Versace.

 He said he expected retail sales to rise around 9 percent 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 Gianni Versace was murdered in Miami in 1997, his sister and designer, Donatella Versace, who owns the company with her daughter Allegra and her brother Santo, 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 at the moment. “They want to remain independent for now,” he said.

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

(c) Copyright Thomson Reuters 2010