Dolce & Gabbana hits €1.9b revenue as losses widen; pivot to beauty, ME
Bottom Line Impact
Revenue growth is being driven by beauty and wholesale, but margin compression and higher leverage threaten sustainability; decisive cost resets, a pivot to beauty and Middle East retail, and disciplined vertical integration are required to stabilize profitability and protect brand equity over the next 12 months.
Key Facts
5- FY2025 revenue €1.9b, up 4% reported (-0.2% cc); wholesale grew 11% and now represents 46% of sales, retail declined 3%
- Beauty reached €603m (+30% YoY) while Fashion and Home fell 8% to €1.23b
- Gross operating margin fell to €30.7m from €80.9m; operating loss widened to €82.4m; net loss increased to €116.8m
- Net financial position deteriorated to -€453m vs -€167.3m a year earlier; secured €100m medium-term financing and extended €300m loan maturity to 2030
- Manifatture Italiane generated €11.8m post acquisition of Fabi/Barracuda (Aug 2024), adding a Europe- and Italy-focused footwear revenue stream
Time Horizons
Executive Summary
Dolce & Gabbana delivered €1.9b FY2025 revenue (+4% reported, -0.2% cc) while profitability deteriorated sharply, with net loss widening to €116.8m and net debt rising to €453m. The mix is tilting toward wholesale and fast-growing in-house beauty (+30% to €603m), with Middle East strength offsetting softness in Europe and China; urgent cost, capital, and channel resets are required to stabilize margins and preserve brand equity.
Actionable Insights
Immediate Actions (Next 30-90 days)
Execute a 2-quarter cash war room: cut non-essential capex by 25-30%, reduce Opex by 8-10%, and target -10 days inventory reduction
Rationale: Net debt at €453m and widening losses heighten covenant and liquidity risk; rapid cash release protects optionality and rating
Role affected:CFO
Urgency level:immediate
Reallocate 20-30% of brand and performance spend toward beauty hero franchises and Middle East activation; expand travel retail doors by 10-15%
Rationale: Beauty is comping +30% and Gulf demand is robust; concentrating spend where elasticity is highest drives faster cash breakeven
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Pause new retail openings outside the Middle East and initiate a footprint review to close or resize 10-15% lowest productivity stores in Europe and China
Rationale: Retail comps are negative and store Opex is inflating; focusing on high-ROI geographies preserves margin and brand elevation
Role affected:CEO
Urgency level:short-term
Integrate the Fabi/Barracuda unit with a 6-month plan to reach >70% factory utilization and shift 20-25% of footwear volume in-house
Rationale: Verticalization can add 150-250 bps to gross margin and improve speed-to-market if utilization and sourcing mix are optimized
Role affected:COO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Liquidity and leverage risk from -€453m net financial position and rising interest costs
- Brand equity erosion via deeper wholesale reliance and potential markdowns in weak markets
- Integration risk of acquired footwear operations leading to cost overruns and inventory build
Primary Opportunities
- Scale beauty globally to sustain double-digit growth and margin mix uplift
- Middle East expansion with high productivity flagships and localized assortments
- Gross margin gains from verticalized footwear and tighter SKU productivity management