D&G acquires Fabi to secure footwear supply amid losses and leverage
Bottom Line Impact
If executed to plan, the acquisition can convert supply risk into a 150-300 bps margin uplift and faster product cycles, stabilizing D&G's market position and strengthening Made in Italy brand equity despite near-term leverage and integration pressure.
Key Facts
5- Manifatture Italiane (D&G subsidiary) acquired control of Fabi in Aug 2024 following a court-approved debt restructuring earlier in spring 2024
- Fabi headcount fell to 170 employees in 2024 from ~370; revenue peaked at €46m in 2012 before the Russia-driven downturn
- D&G group revenue reached €1.9bn, +4% reported (-0.2% constant FX)
- Fashion and Home sales declined 8% to €1.23bn; Beauty grew 30% to €603m
- FY loss widened to €116.8m; net financial position deteriorated to -€453m vs -€167.3m, amid reports of investor and bank debt talks in Oct-Nov 2024
Time Horizons
Key Roles Affected
Executive Summary
Dolce & Gabbana has vertically integrated footwear by acquiring its long-time Italian supplier Fabi via Manifatture Italiane in Aug 2024, shoring up product quality and speed but adding near-term integration and cash demands. With Fashion and Home sales declining and a widened net loss, execution must convert the new capacity into margin gains, working-capital relief, and faster turns within 6-12 months.
Actionable Insights
Immediate Actions (Next 30-90 days)
Launch a 100-day integration PMO with weekly KPIs on yield, OTIF, and capacity, setting clear targets for 150-300 bps footwear margin uplift in 12 months
Rationale: Disciplined governance accelerates synergy capture and keeps operational focus on measurable value creation rather than footprint expansion alone
Role affected:CEO
Urgency level:immediate
Secure a €150-250m liquidity buffer via revolving credit and working-capital facilities; ring-fence Fabi capex at €15-25m with payback under 3 years
Rationale: The widened net debt position and integration cash needs require headroom; targeted capex in automation and QC boosts yield and reduces unit cost
Role affected:CFO
Urgency level:immediate
Short-term Actions (6-12 months)
Pilot 3-4 footwear capsules leveraging Fabi capacity with 8-10 week concept-to-shelf cycles and 20-30% smaller initial buys linked to rapid replenishment
Rationale: Speed-to-market and controlled buys reduce markdown risk and convert supply chain control into newness and higher full-price sell-through
Role affected:Chief Merchandising Officer
Urgency level:short-term
Implement PLM-to-shopfloor digital integration and lean programs targeting 10-15% scrap reduction and 5-8 point OEE improvement in 6 months
Rationale: Quality yield and equipment utilization are the fastest levers for gross margin improvement in insourced manufacturing
Role affected:COO
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Integration cost overruns and slower-than-expected productivity ramp reduce margin realization
- Demand softness in Fashion and Home prolongs negative operating leverage and inventory risk
- Labor retention challenges in Marche constrain capacity and quality scaling
Primary Opportunities
- Made in Italy provenance and traceability premium support pricing power and brand equity
- Faster design-to-delivery enables more frequent, lower-risk capsules with higher full-price sell-through
- Supplier consolidation strengthens bargaining power on components and improves quality consistency