MILAN - THE Italian luxury group Versace announced its chief executive Giancarlo di Risio was leaving by mutual consent after a board meeting late on Friday.

'Gianni Versace SpA and Mr Giancarlo Di Risio announce that they have reached the mutual decision to close their professional relationship,' the house said in a statement, adding that Di Risio had agreed to stay on temporarily to 'guarantee a smooth transitional period for the company.'

The announcement came after press reports saying he was poised to resign after a disagreement with Donatella Versace, the house's artistic director.

The fashion house last week denied rumours that the sister of the late Gianni Versace had opposed cost-cutting measures imposed by the manager to combat the current financial downturn.

Di Risio was appointed in September 2004 to restructure the business, which had been in crisis since Gianni Versace's murder in Miami in 1997, and at the time had losses of EU$26.5 million (S$53.9 million).

The former chief executive of Fendi managed to get the company back into profit over the next five years. In 2008 Versace had sales of EU$336 million with profits of EU$9 million.

In the first three months of this year, the house announced turnover of down 13.4 per cent because of non-payment of royalties for the Versace Jeans line by Ittierre, the Italian textile company which produced them under licence and is currently in serious financial difficulties.

Reports in the Italian media said Di Risio could join the flamboyant designer Roberto Cavalli, who recently announced that he had sold a 30 per cent share in his company to the Italian investment bank Clessidra, which was looking to recruit a manager from outside the house. -- AFP