The Donatella Style

Donatella Versace is sitting on the overstuffed sofa in her late brother's living room in Milan, talking about how much she loves doing his job. In a rapid staccato, she insists that she's in control and running the billion-dollar business "as Gianni would have wanted it."

That is far from clear. In the year and a half since her brother was murdered on the steps of his Miami Beach mansion, Donatella has virtually erased the look that he spent a lifetime creating. Gone are the sexy-hooker dresses, the fun and flashy designs that made Gianni so famous. In their place: softer, sleeker corporate suits and gauzy gowns. Where Gianni favored bold primary colors topped off with gaudy beads or rhinestones, Donatella prefers floral prints and feminine hues. She has replaced dozens of her brother's longtime employees--including his boyfriend of more than a decade--with fresh-scrubbed assistants just out of school or swiped from the couture houses of Paris. She sacked legendary fashion photographer Richard Avedon, who had shot the Versace campaigns since the first in 1978, and hired Steven Meisel, darling of the younger fashion set. And she killed the lower-priced Instante line. "I know who the Versace woman is," she declares, "because I wear the clothes myself."

This week, Donatella, 43, unveils Versace's new women's ready-to-wear collection in Milan. Though it is her fourth ready-to-wear collection since her brother's murder, most retailers believe it is only the second she developed entirely on her own. The first was shown at the Versace palazzo in Milan last October. In that collection--which featured canary yellow flowered Capri pants and crocus-colored cocktail dresses--it was obvious that she was no longer paying homage to Gianni or working off his leads. The look was rocker chick goes American Cover Girl, as epitomized by her friend Courtney Love, who sat in the front row wearing a crown of thorns.

The response was mixed. Women's Wear Daily declared that Donatella "infused the signature steam with a certain sweetness," but other critics were not so generous. "None of this was inventive," wrote the International Herald Tribune's influential fashion critic, Suzy Menkes. "Gianni Versace would study cut and drape and push them to their tricksy outer limits." Retailers were cautious about how the line would actually sell. Said Suzanne Patneaude, vice president for women's designer apparel at Nordstrom, "We love what Donatella does on the runway--it's so young and vibrant and fresh--but the customer who can afford Versace isn't 25."

Sales seem to bear that out. Though net profits of Gianni Versace SpA rose 35 percent in 1997--thanks in large part to the proceeds from Gianni's $19.9 million life insurance policy--the company's operating profit fell 5.6 percent. And Versace expects a drop in sales and profits for 1998, citing the Asian economic crisis.

To be sure, Donatella works very differently from her brother. While Gianni was a hands-on designer with a very small team, Donatella oversees scads of assistants and edits their work. She doesn't sketch herself. When she took over the company, she says, "I had two choices. One was to take the work of Gianni and update it. The second was to take the collections further."

There was no question that she would opt for the latter. Even when she was working as an assistant to her brother, she fought with him over his baroque creations, convinced that minimalism was the way to go. "Donatella was a very powerful critic," says Gianni's longtime friend, Guisi Ferre. "And Gianni would yell, 'Donatella, you want to kill my spirit? My success?' " During the last year of Gianni's life, tensions between the two ran so high that when she's asked about it during an exclusive interview with NEWSWEEK, she shuts up and looks away. "Next question," she finally says.

When they were children, their relationship was much less fraught. The siblings, along with their big brother, Santo, the company's business manager, grew up in very simple surroundings in Reggio di Calabria, in the toe of Italy. Though Gianni was 10 years older than his sister, they were so close that, as Gianni's childhood friend Bruno di Robertis explained, "There were two children in that family: Santo was one, and Gianni and Donatella was the other." When Gianni worked as a freelance designer in Milan in the early 1970s, Donatella would join him each weekend from Florence, where she was studying to become a teacher, to party. And when he launched Versace in 1978, it was his club-hopping baby sister who kept in touch with pop culture and worked with him each day on his collections. They ran Versace like a monarch and consort.

But in the early 1980s, another figure entered this tableau. Gianni met a chiseled American model named Paul Beck at a casting, and in no time flat, they were inseparable. Then, in 1983, Beck caught the fashion set off guard when he married Donatella. Three years later, Donatella gave birth to a daughter, Allegra, whom Gianni loved as his own. "Gianni saw Allegra as a projection of himself," Donatella explains, "and as a projection of me." When the designer was diagnosed with cancer of the left ear in 1996, Donatella took over the atelier. Publicly at least, Gianni was pleased with what Donatella was doing. "I'm so lucky," he said. "I'm one of the few designers who can count on a great strength like Donatella."

But when Gianni retook the helm several months later, relations between the two were more strained than ever. Donatella was enjoying her new power, and now says quite frankly, "It was hard to give it up." Before Gianni's couture show in July 1997, friends say the two had a showdown. Donatella was orchestrating the look of the models and Gianni hated it. "Enough!" he blasted, according to Ferre. "I have decided that we will do things differently. Women want to be beautiful, not like this!"

On July 6, 1997, Gianni presented in Paris what many fashion critics considered to be his finest haute couture collection. Then he flew to New York, where he signed a contract giving Morgan Stanley and the Banca Commerciale Italiana the mandate for an IPO. The plan was to float 25 to 30 percent of the company, whose total value analysts estimated at $1.5 billion. Two days later, he boarded a plane to Miami, thrilled with the prospect of going public. At dawn on July 15, Gianni called Donatella in Rome to discuss his next collection, then went out to get the papers. When he arrived home, Andrew Cunanan walked up and shot him.

Gianni's death paralyzed the company. The IPO has been put on hold until the family pays the inheritance tax on his estate, which he left to Allegra, now 12. When the Versaces eventually take the company public, Donatella said last week, "I would float a small part only. I am not in favor of putting the whole company on the market." Inside the industry, rumors abound that Santo has been in negotiations with Bernard Arnault, the head of Moet Hennessy Lous Vuitton, to sell his share of Versace, but both sides deny it.

Though the grief over Gianni's death has eased, there are still signs of stress inside the House of Versace. Worried about her daughter's well-being, Donatella has yanked Allegra out of the spotlight and hired bodyguards to shield her from paparazzi. Beck has similarly withdrawn from public view. And friends and colleagues say that Donatella and Santo argue incessantly.

Outwardly, however, Donatella sparkles like the diamonds on her fingers. Allegra is in Milan, she bubbles, having fun in school; Beck is busy with the latest ad campaign, and she and Santo are working harmoniously to carry on Gianni's legacy. She will travel to Miami later this month for the opening of a Versace retrospective at the Museum of Contemporary Art. "I have to go back to the house," she says. "I have to go back to Gianni's room. I used to feel so peaceful when I would walk in that room. I want to feel that peace again."

And then, in true Versace style, she's going to throw a big party. Just like Gianni would have wanted.

Then: Gianni's World The Look: Vulgar diva and sexy hooker, usually in bold colors. Loved gaudy embroidery and beading, metal mesh and black leather bondage clothes.
Friends: Elton John, Sting and Trudie Styler (he designed her wedding gown), Tina Turner, Prince, Madonna, Raquel Welch, Tupac Shakur, Elizabeth Hurley (wore the famed safety-pin dress), Princess Diana
Fashion Supporters: Anna Piaggi, former editor of Italian Vogue; Diana Vreeland; Richard Martin, curator of the Costume Institute at New York's Metropolitan Museum of Art
Education: Learned the art of sewing in his mother's atelier in Reggio di Calabria
Pastimes: Reading, collecting art, acquiring houses
Lieutenants: Antonio d'Amico, his boyfriend, who handled the lower priced Instante and Versace Sport lines; sister Donatella, who oversaw Versus, the younger line
Ad campaign: Always by Richard Avedon. Nearly naked supermodels against a gray background.

Now: Donatella's World The Look: More feminine, minimalist, nearly prim. Favors pastels and flower prints, high-tech fabrics, chiffon gowns and sleek suits.
Friends: Courtney Love, Liv Tyler, Puff Daddy, Melanie Griffith, Demi Moore, Jennifer Lopez, The Backstreet Boys
Fashion Supporters: American Vogue editor Anna Wintour (they vacation together); Franca Sozzani, current editor of Italian Vogue
Education: Studied foreign languages and literature at Belle Arti University in Florence; planned to become a teacher but never graduated
Pastimes: Exercising, weight lifting, entertaining
Lieutenants: Design assistant Jurgen Oeltjenbruns, 30, graduate of the Royal College of Art and formerly of Christian Dior in Paris; Lorenza Baschiere, also 30, graduate of the Domus Academie fashion school in Milan
Ad Campaign: By photographer Steven Meisel, who is popular with the younger set