Dolce & Gabbana SpA

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Dolce & Gabbana SpA

Via Goldoni, 10
20129 Milan
Italy
Telephone: +39 02 774271
Fax: +39 02 76020600
Web site: http://eng.dolcegabbana.it/main.asp

Private Company
Incorporated: 1982
Employees: 1,531
Sales: EUR 475 million ($524 million) (2003)
NAIC: 316214 Women's Footwear (Except Athletic) Manufacturing; 315233 Women's and Girls' Cut and Sew Dress Manufacturing; 315234 Women's and Girls' Cut and Sew Suit, Coat, Tailored Jacket, and Skirt Manufacturing; 315999 Other Apparel Accessories and Other Apparel Manufacturing

Dolce & Gabbana SpA cuts an independent swath in the international fashion scene. The Milan, Italy-based company is one of that country's most well-known fashion houses, boasting such high-profile clients as Madonna, Isabella Rossellini, Monica Bellucci, Tom Cruise, David Beckham, Kylie Minogue, and many others. Led by founders Domenico Dolce and Stefano Gabbana, who serve as company CEO and president, respectively, the company produces designs for women's and men's clothing, shoes, bathing suits, lingerie, and accessories. The company also designs a children's clothing line, and develops eyeglasses and fragrances produced under license. Products are grouped under two core brands: Dolce & Gabbana, and D&G Dolce & Gabbana. The company also further divides its designs under the "basic" White line and the more adventurous "Black" line. Dolce & Gabbana has been moving toward greater vertical integration in the 2000s, buying control of much of its own production, and bringing in-house most of its formerly licensed products. The company also has been buying up many of its previously franchised retail sites, and at the end of 2003 directly controlled some 60 stores. While remaining committed to its privately held status, in 2003 Dolce & Gabbana took the unusual step of publishing its first annual report—in part to highlight its impressive growth. By that year, the company's sales had risen to EUR 475 million ($525 million).

Partnering for Success in the 1980s

Domenico Dolce began his fashion career designing for his father's small clothing manufacturing business near Palermo, in Sicily. Dolce went on to study fashion design, then moved to Milan, where he became an assistant designer in a workshop in 1980. There, Dolce met Venice-born Stefano Gabbana, then just 18, who had entered the fashion business after starting out in graphic design. The pair quickly began working together, and by 1982 decided to enter into business for themselves, setting up their own studio in Milan that year with an initial investment of the equivalent of just $1,000.

Dolce and Gabbana worked as free-lancers, designing for other houses in the early 1980s. The partners' big break came in October 1985, when they were among a select group of just three young Italian designers chosen to present their designs in the "New Talents" section of that year's Milano Collezioni event. Dolce and Gabbana threw themselves into the preparations for the show, laying the foundations for the later Dolce & Gabbana look. The partners' irreverent and overtly sexual designs caused an immediate sensation, and Dolce & Gabbana left the event as an established brand name.

Dolce and Gabbana now set to work on creating their first full collection, and in March 1986 solidified their reputation with the presentation of their "Real Women" show. The Dolce & Gabbana look became synonymous with pinstripe suits, overtly worn lingerie, and extravagant prints—especially animal patterns—alternated with designs in black.

The company opened its first showroom in 1987, on Milan's Via Santa Cecilia. For the production of the line, the pair turned to Dolce's father, whose company, Dolce Saverio, became the group's primary manufacturer. That position was solidified when the two companies signed an agreement that turned over production of Dolce & Gabbana's ready-to-wear line to Dolce Saverio in 1988.

By then, Dolce & Gabbana were rising stars of the international fashion world. Their reputation was helped in large part by their success in dressing a number of top Hollywood names—such as Isabella Rossellini, who famously stated: "They find their way out of any black dress, any buttoned-up blouse. The first piece of theirs I wore was a white shirt, very chaste, but cut to make my breasts look as if they were bursting out of it."

Dolce & Gabbana's designs became steadily more sensual toward the end of the decade, as the pair heightened what was described as their celebration of womanhood. This "celebration" continued to attract celebrities to the young design team's creations. An important early customer was Madonna, who told WWD: "I like their designs because they make clothes for a womanly body. Most designers seem to be making clothes for girls with stick bodies who are flat-chested, but I always appreciate my own voluptuousness when I'm wearing their dresses."

Even as Dolce & Gabbana built a following in Hollywood, the company had begun to build sales in the Far East, specifically in Japan. In 1988, the company signed a distribution agreement with Onward Kashiyama, which opened the first Dolce & Gabbana franchise store in Tokyo the following year.

Fashion Stars in the 1990s

In 1989, Dolce and Gabbana expanded their collection, adding beachwear and the Intimo line of lingerie. In January 1990, the company expanded again, launching its first Men's collection. At the same time, Dolce & Gabbana signed on as the design team behind the Complice clothing line—previously designed by Versace and Claude Montana—marketed by Milan's Genny Group. In November 1990, the company backed up its growing U.S. sales with the opening of its first showroom in that country, in New York City. By then, the group's sales had topped the equivalent of $20 million.

Dolce and Gabbana continued adding to their collection of designs with the launch, in 1991, of a series of scarves, produced under license, followed by a second licensed product, ties, in early 1992. These products were followed by other licensed products, including the first Dolce & Gabbana-branded perfume, produced and distributed by Euroitalia, and a men's beachwear collection, also launched in 1992. In 1993, the company added men's underwear, again manufactured under license. Footwear also became part of the Dolce & Gabbana portfolio during this period.

Dolce & Gabbana's growth maintained its rapid pace throughout the 1990s. The brand achieved new fame when Dolce & Gabbana were chosen to create costumes for Madonna's 1993 world tour. The immediate interest in the group's clothing following that tour led it to shift into high gear: in 1994, Dolce & Gabbana created a secondary line, D&G Dolce & Gabbana, designed for a broader, and younger, market. That line was launched in partnership with Iteria, which acquired a six-year production license.

The success of the new line quickly boosted the company's sales. From approximately $50 million at the beginning of 1994, Dolce & Gabbana's revenues jumped to nearly $125 million by the end of that year. First launched in Europe, the D&G collection was introduced to the U.S. market in 1996.

Dolce & Gabbana also began adding new large-scale "signature" boutiques, featuring the group's full collection. By 1997, the company operated 13 boutiques, in addition to a growing number of franchised locations. Adding to the company's sales was the 1995 launch of its D&G Jeans line. In that year, in addition, the group signed a license agreement with Italy's Marcolin to produce Dolce & Gabbana-branded eyewear.

Vertically Integrated and Independent in the 2000s

With retail revenues soaring past $200 million, Dolce & Gabbana began a restructuring effort in the late 1990s. A key feature of the group's new organization was a drive toward becoming a vertically integrated group with control of its own industrial operations. In 1999, the company bought up a 51 percent stake in Dolce Saveria, which, in addition to giving the company its own production component, brought Saveria's $58 million in revenues into the business. The acquisition also included a 100 percent stake in subsidiary DGS, which had handled distribution to the group's sales network. Dolce & Gabbana also bought a 6 percent stake in its eyewear licensee, Marcolin, which was then preparing its public offering.

Having acquired its own production capacity, Dolce & Gabbana now moved to further its vertical integration. In 2000, the company took over the manufacturing of many of its formerly licensed products, including ties, scarves, beachwear, and lingerie and underwear. Later that year, the company established its own Leather & Footwear division near the Italian shoe center of Florence, which began producing prototypes of the Dolce & Gabbana shoe designs.

Company Perspectives:

It's not easy to circumscribe the Dolce & Gabbana universe within a definition. A world made up of sensations, traditions, culture and a Mediterranean nature.

Domenico Dolce and Stefano Gabbana have made a trademark of their surnames which is known throughout the world, easily recognizable thanks to its glamour and great versatility. Two Designers who have known how to make a flag out of their Italian character.

Two Designers who have known how to interpret and impose their sensual and unique style on a world-wide basis. Two young Designers who address themselves to young people and who draw inspiration from them. Two Designers adored by the Hollywood stars who have made the duo their favorites: two Designers who dress all of the rock stars of the moment and who have elected them as their unquestionable leaders. The Designers of Madonna, Monica Bellucci, Isabella Rossellini, Kylie Minogue and Angelina Jolie, amongst others.

In the meantime, the company continued to hone its product offering, dividing its clothing collections into two new labels: the more basic White and the more extravagant Black. The new labels first appeared in 2000. At the same time, the company launched its own collection of watches, D&G TIME. Another significant launch for the company came with the début of its line of children's clothing in 2001.

Dolce & Gabbana now began gearing up for even greater expansion in the 2000s. In 2003, the company continued in its vertical integration drive, opening a number of new, large-scale flagship stores, including in New York City and Las Vegas, as well as making its first entry into the Chinese market, with the opening of a store in Hong Kong. Dolce & Gabbana also moved to take firmer control of its retail network, beginning a program of buying out its franchisees, including the purchase of 20 stores from its Japanese partner that year. At the end of that year, the company's revenues had grown to EUR 475 million ($525 million).

By then, Dolce & Gabbana had matured into a fully vertically integrated and independent business. The company also was brimming with confidence. As Stefano Gabbana told the Daily News Record: "We're a strong company and right now we're at a significant period in our business. By 2005, we should reach the one-billion-euro mark." The company even began publishing its own annual reports—despite the fact that it had no plans to shed its status as a privately held company. From a company launched with just $1,000, Domenico Dolce and Stefano Gabbana had built one of the world's most respected fashion houses.

Principal Subsidiaries

Dolce & Gabbana Japan KK; DGS SpA; Dolce & Gabbana Industries SpA (51%).

Principal Competitors

Christian Dior SA; LVMH SA; Benetton SpA; Guess SpA.

Key Dates:

1982:: Domenico Dolce and Stefano Gabbana open their own studio in Milan.
1985:: Dolce & Gabbana is selected as one of three "New Talents" for the Milano Collezioni.
1986:: Dolce & Gabbana debuts its first full collection of women's clothing.
1991:: The company launches a scarves collection, the first product to be made under license.
1995:: D&G is launched in the United States.
2000:: The company brings production of scarves, ties, and other accessories in-house.
2003:: The company begins buying out franchise store owners, predicting sales of more than EUR 1 billion by 2005.