Donatella Versace, the iconic figurehead of the Versace fashion empire, was in high spirits as she partied the night away at Elton John’s Oscars watch party and Vanity Fair’s annual post-show extravaganza earlier this month. The diminutive blonde, known for her bold style and larger-than-life personality, made two heavily sequined costume changes, turning heads as she mingled with A-listers like Elizabeth Hurley, her son Damian, Amazon tycoon Jeff Bezos, and his fiancée, Lauren Sanchez. However, beneath the glitter and glamour of that star-studded night, trouble was brewing back in Milan. Plans were unfolding to oust Donatella from her longtime role as chief creative officer of Versace, the brand founded by her late brother, Gianni, amid plummeting sales and clashes with CEO John D. Idol. An New York-based fashion insider revealed that Donatella was being scapegoated for the company’s struggles, which many insiders attribute to poor management rather than her creative vision.

This week, it was officially announced that Donatella would step down as lead designer to take on the role of chief brand ambassador, while Dario Vitale of Miu Miu would step in as the new creative director starting April 1. The decision marked a significant shift in Donatella’s involvement with the brand she has helmed for decades. Under her contract, signed when Versace was sold to Capri Holdings in 2018, she is now banned from using her family name for any other brands she may launch and is restricted from designing clothes for other companies. The tension between Donatella and Capri Holdings began almost immediately after the $2 billion acquisition, when Emmanuel Gintzburger was appointed as CEO. Insiders claim that Donatella felt deliberately pushed out of the company her brother built, and her creative direction was increasingly undermined. While she had no issue with a succession plan and even suggested Vitale as her replacement, she felt disrespected by Capri executives who prioritized profits over her artistic vision and legacy.

Donatella’s journey with Versace has been nothing short of extraordinary. Following the tragic murder of her brother Gianni in 1997, she took the reins of the company, transforming it into a global powerhouse despite having no formal fashion training. She became a beloved figure in the industry, celebrated for her authenticity and her ability to create show-stopping gowns that turned her clients into red-carpet royalty. From Britney Spears to Kim Kardashian, Halle Berry to Gwyneth Paltrow, Donatella dressed some of the biggest names in Hollywood, creating moments that defined pop culture. Her most iconic design, the sheer green “jungle” gown worn by Jennifer Lopez to the 2000 Grammys, was so impactful that it inspired the creation of Google Images as the world searched for pictures of the dress.

However, beneath the surface of Versace’s glamour lies a tale of financial struggles and creative conflicts. When Capri Holdings acquired Versace in 2018, then-CEO John D. Idol envisioned a future where the brand could expand its reach and boost sales by rebranding and elevating its products. He pushed Donatella to adopt a Versace monogram similar to those of Michael Kors and Louis Vuitton, and introduced a geometric Greca pattern across the brand’s designs. While the brand raised prices to position itself as a luxury powerhouse, the timing couldn’t have been worse. The global demand for luxury goods slowed, and Versace’s revenues plummeted. Between April and June 2024, the company’s revenues dropped by 15.4%, resulting in a $17 million operating loss. By February, Capri Holdings was downgraded to “junk territory” by S&P Global Ratings, signaling deeper financial troubles.

Despite her contributions, Donatella found herself at the mercy of Capri Holdings. Insiders describe her as a visionary who was stripped of her creative freedom and disrespected by executives who saw her as a liability rather than a legend. “She wanted to protect her family and her legacy,” said one insider, but Capri executives “didn’t give a shit.” The situation mirrors the stories of other designers like Donna Karan and Calvin Klein, who lost control over their namesake brands after selling them. Jo Malone, the founder of the eponymous perfume brand, has openly spoken about the heartache of leaving her company, calling it “the worst decision I ever made.” For Donatella, the loss is deeply personal—Versace is not just a brand but her DNA, her identity.

As Donatella transitions into her new role as chief brand ambassador, the future of Versace hangs in the balance. Insiders predict that the brand will evolve under Dario Vitale, who is credited with driving a 97% increase in sales at Miu Miu last year. While Donatella’s departure marks the end of an era, industry experts believe that her influence will remain at the heart of Versace. “She’s had amazing red carpets, but the brand needs to be more than that,” said one insider. Donatella herself has expressed hope that the brand will endure, saying, “Versace is in my DNA and always in my heart.” Yet, the story of Donatella Versace and Capri Holdings serves as a cautionary tale of the tension between creative genius and corporate ambition—a reminder that sometimes, even the brightest stars can be dimmed by the pressures of the business world.

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