Dolce e Gabbana has realised double-digit growth in both revenues and profits. For the year ended 31 March net profit increased 11 percent to €108.8 million on sales up 18 percent to €809.5 million. Original forecasts estimated sales growth of 15 percent.
This fiscal year the company will consolidate the sales volume of the D&G diffusion line with that of the core Dolce e Gabbana activities. The diffusion line will be produced and distributedentirely in-house for the first time this year after Dolce e Gabbana ended its 12-year licensing agreement with IT Holding. D&G generates about €250 million in annual sales and the company expects double-digit sales growth during its first year under direct management. The consolidation of the two labels will turn Dolce e Gabbana into a €1 billion fashion company.
“We intend to continue along the growth path of the last few years, and at the same time retain our independence,� Domenico Dolce and Stefano Gabbana said in the annual report. “This will allow us to fully develop the still-unrealized potential of our brands and the markets in which we operate.� Like Armani, the duo does not want to take the company public, preferring independence to having to answer to shareholders.
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In 2005 the company invested €130.5 million in operations, double the amount in 2004. It invested €48.6 million in commercial spaces, including its new headquarters. Capital expenditure also included communications investments up 18 percent to more than €86 million. Meanwhile, earnings before interest and tax gained 14 percent to €163 million. Thanks to royalties and cash flow from eyewear licensee Luxottica, the company has managed to eliminate its debt. Its current net position is €85.8 million, up from a debt of €21.4 million the year before. Dolce e Gabbana is also investing significant amount in the D&G brand. Christina Ruella, director of General Affairs for the company, told WWD that it might on day, “in the very long term� generate more revenue than the Dolce e Gabbana brand. In the meantime, it has hired 460 new employees to develop the brand and plans to take on another 40 as the business develops.
Wholesale revenues rose 10 percent to €1.15 billion, with women’s wear and accessories representing 60 percent of the total. Apparel, with 46 percent, represents the majority of wholesale sales. This category saw sales rise 7 percent to €530.6 million, while leather goods sales soared 32 percent to €123.6 million. Sales from watches, eyewear, fragrances and jewellery climbed 6 percent to €432.1 million.