By  on February 19, 2008

MILAN — To mark the evolution of the D&G brand since production was taken in-house two years ago, the company is investing in a global retail project and the launch of a new store concept.

"We are bringing D&G to a higher-end, fully fledged ready-to-wear line," said Stefano Gabbana before the brand's show on Monday. "It's less about disco-dancing and denim and more of a signature line."

Indeed, D&G is steadily establishing itself as a significant driver of the group's business. The line has grown to account for 44 percent of Dolce & Gabbana SpA wholesale sales, which at the end of March 2007 reached 1.55 billion euros, or $2.12 billion at average exchange rates, up 35 percent compared with the previous year.

In an exclusive interview, Cristiana Ruella, managing director of Dolce & Gabbana, said that at the end of March 2008, the company expects D&G's sales to reach 500 million euros, or $730.7 million at current exchange rates, and that sales of the spring 2008 collection rose 33 percent versus spring 2007. Europe accounts for 24 percent of the brand's sales, followed by Japan (17 percent), the rest of Asia (14 percent) and Italy (12 percent). The U.S. contributes 8 percent of sales.

D&G currently counts 81 boutiques around the world. Ruella said retailing offers the "best perception" of the brand and that the company is investing 5 million euros, or $7.2 million, in the opening at the end of May of a Los Angeles boutique featuring the new D&G store concept. Ruella also said that, while Europe, the U.S. and Japan continue to be strong markets for the brand, the company is banking on emerging countries as well, and will open boutiques in New Delhi in the spring, and in Beijing and Kobe, Japan, in the fall, all modeled on the L.A. concept.

Boutiques in China's second-tier cities such as Shenyang and Dalian are also slated to open by yearend.

Gabbana told WWD the new store concept will be very "Seventies" and "warm, a new version of old warehouses with a welcoming feel." Colors will revolve around nickel and burgundy. In Los Angeles, the 6,480-square-foot store will be located on Robertson Boulevard, replacing the three existing D&G units, which Ruella said were dated and "no longer in line with the new strategy." All the new boutiques will reflect the brand's updated design. The first new concept store will actually be in Italy's Verona next month, although it isn't considered a flagship store like the one in L.A.In spring 2009, the company aims to open D&G's biggest boutique in the world in a 14,040-square-foot building in Moscow.

The Middle East is also a strong market for D&G, accounting for 5 percent of sales. Stores in Kuwait and Jeddah, Saudi Arabia, will open this spring, followed by openings in Doha, Qatar and Manama, Bahrain, in the fall, and Riyadh, Saudi Arabia, and Dubai in spring 2009.

With the spring 2008 collection, D&G is also available at 2,150 points of sale around the world. Ruella said she did not want to give up on wholesale sales. "If the store is of quality, we want to be in it," she said.

Since the company took the D&G license in-house in 2006, it has more than doubled the Legnano production site outside Milan, and the one in Incisa Val d'Arno, Tuscany. As for employees, it has hired 650 people dedicated to D&G in one year, reaching 3,624 employees at the end of January. The brand is also investing $8 million in new 41,120-square-foot office space in New York. The four-story building is located on Lafayette Street, where D&G is moving from previous offices on Broadway, and will be ready in the next six months.

New branch offices were set up in Barcelona, London and Düsseldorf last year, based on the brand's striking $48 million, state-of-the-art headquarters in Milan featuring Ron Arad pieces, which was inaugurated in July 2006. New 17,000-square-foot offices in Paris are slated to be completed in June.

Ruella said D&G is not planning to expand to any other product categories at the moment. The executive was particularly upbeat about the growth of the accessories division, which has grown to account for 23 percent of sales, up from 7 percent two years ago. With the spring 2008 collection, clothing produced 66 percent of sales, and innerwear and beachwear, 11 percent. The women's division contributed 54 percent of revenues, with men's wear making up the rest.

The company is also boosting marketing, p.r. and advertising of the brand, growing that budget by 20 percent for 2008.D&G was launched in 1994. The first flagship store opened in Milan the following year. The license was brought in house in 2006, after 12 years with Ittierre, owned by IT Holding.

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