By  on December 20, 2011

MILAN — Even though they’ve been building their company for more than 25 years, turning it into a $1.46 billion business, with a global retail network of 252 units and more than 3,400 employees, the definition of “boys” appears to cling to Domenico Dolce and Stefano Gabbana. It could be their plucky attitude, as when they decided to fold the D&G brand into their signature line earlier this year. Or an emotional intensity that can drive provocative advertising imagery, ongoing celebrity connections and periodic Madonna fixations. Or their fascination with the fight game and their investment in one of Italy’s toughest boxing teams — not your typical fashion-industry pastime.

Whatever the perceptions, “the boys” are among the few Italian designers of their generation to sustain ongoing commercial success. As they map out their plans for the future of their brand, the designers seem ready to step into a more grown-up box. The difficult economy isn’t denting their gains, as the firm closed its fiscal year ended March 31 with earnings before interest, taxes, depreciation and amortization (EBITDA) of 284.8 million euros, or $376 million at average exchange, up from 262.1 million euros, or $393.1 million, in the previous fiscal year. Investments in their stores in the year ending March 31, 2012, are estimated to reach 40 million euros, or $53.8 million at current exchange, up from 25.4 million euros, or $33.5 million, at the end of March 2011, with four boutiques opening in the U.S., of which one will be on New York’s Fifth Avenue, four in China, one in São Paulo, Brazil, one in Spain and one in Berlin in the calendar year 2012.

The year has had its share of drama off the runway, too. The designers expressed clear consciences and a lack of bitterness, albeit disappointment, over their battle with Italian authorities concerning alleged tax evasion. The latest chapter involves a Supreme Court decision to reopen hearings on charges that had been dismissed several months ago by a lower court.

There’s no doubt the two designers oversee a well-oiled machine, and they dearly value their independence, which they’ll tell a reporter allows them the freedom to follow their instincts and take quick action on any idea. And, despite the recent wave of fashion initial public offerings, they see a public listing as remote as selling the company they built together — a company they define as their “baby.”

Their perceived persona may not quite fit with their less public one. Season after season, Dolce and Gabbana produce some of the highest-energy, highest-profile collections on the international fashion circuit. And the media record how they seem to have the Italian way of life down to a T: paparazzi photographers feeding on shots of the designers sunbathing on the deck of their yacht off the Sicilian islands; catching the opening night of the La Scala theater season, or celebrating their glamorous relationships with the likes of Scarlett Johansson, Naomi Campbell and Monica Bellucci. But there is a side to the designers that they religiously protect, rarely allowing outsiders into their design studio or even their office. The fact that Dolce is a skilled tailor, who still falls to his knees to personally cut a hem and sew on a button, may not be common knowledge, but is essential to the success of the brand, as much as Gabbana’s sense of fashion and the carefully fine-tuned, Mediterranean aesthetic they have been sharing over the years.

WWD caught up with the designers for a year-end report and a look into 2012.

WWD: What will the new year bring in terms of strategies and developments, especially in light of your decision to close the D&G line, which some may consider a daring one?
Stefano Gabbana:
The brand isn’t shutting down; it continues to live as it will simply be folded into the Dolce & Gabbana collection. It allows us to expand our signature collection, both in terms of product offer and market range. There is a more interesting entry price, which allows us to open up to other points of sale, just as we develop a higher-end, demi-couture section with richer fabrics, linings in silk georgette or silk satin, or more precious buttons. Quality is essential and we want to convey to our customers the idea that they are buying a well-made, luxury product. D&G was born in 1994, out of a need, because we made collections that were very big, and D&G addressed a younger segment. It helped us to be recognized and worked really well, but then the moment came to think of the brand in 100 years, when we won’t be around anymore. Big brands have one label — think Chanel, we always refer to it, and that also uses the double C. To have a stronger brand, it must be one and the focus must be on that alone. Yes, some may think it’s a brave decision, but it came naturally to us, and we had been thinking about it for the past three years. Over this period we’ve added entry-price items and a higher-end production at the same time. We’ve had [Dolce & Gabbana] dresses retailing at around 450 or 600 euros [between $605 and $807] in our windows for a few seasons now, and these are not expensive for our signature line.

WWD: When will we first see the results of this decision?
S.G.: Already with pre-fall.

WWD: You speak about pricing and being more affordable. Does this reflect your concern for the crisis and crimped consumer spending?
S.G.: No, not really. When we started out in 1984 there was the crisis, in 1990 there was the crisis, then in 2000; we’ve been in a crisis so many times [with a laugh], but we try to ride it and we want to be able to offer different, quality things at the right price. It’s our own marketing. We do a lace dress, and perhaps it’s not macramé, but jersey. We don’t want to have people pay absurd prices for a T-shirt, it’s about use and function. The D&G logo will appear on Ts and buckles, for example. We offer a different perception to our customers, and many who bought D&G are moving toward Dolce & Gabbana.

WWD: Do you see a couture collection going forward?
No, not really. We just launched a jewelry line, and there are other products in the pipeline: a project we will present by March or April, and many with [beauty licensee] Procter & Gamble for example, and much more…but I can’t say anything now.

WWD: There are 68 D&G stores. What will happen to them?
Some of the franchised stores will be closed, but most of the ones that are directly owned will be converted to Dolce & Gabbana boutiques. We will open a store on Fifth Avenue in New York in 2012, followed by another one, but we’ll keep the Madison store. This will remain as a small gem, but on Fifth you will really see the evolution, we will change the way we display [products], with mobile furniture. It’s never static. We are working on the style, but it’s an evolution within one style that is recognizable.

WWD: And what would you like to be recognized for? What would you like Dolce & Gabbana to stand for?
: Italian style — Mediterranean.

WWD: I gather you are investing in the U.S. market, so no doldrums in that region for your brand? How much does it account for in terms of sales?
America is really one of the most profitable markets for us, and it’s great for our perfumes and makeup, too. The U.S. accounts for 13 percent of our business.

WWD: So, the company keeps growing. Do you mind if people still call you boys?
[Laughs] No we are democratic, we know we are no longer boys, we are men. Maybe it’s because no other big designer emerged after us, or maybe because, as you were saying, we take risks, which is associated with youth. It’s not arrogance, but we’ve never been afraid to dare, because if we are sure, we just go for it. It’s an attitude. We are free in our decision making, and we are sort of brave in that sense.

WWD: And you also surround yourself with young people.
Yes. We have been young, and we are mature men now, but we remember, we know what it means not to have support. So we appreciate, help and enhance young people. We have young assistants in their 20s, we toss them in the midst and they help show a different point of view. It’s the ingenuity or “ignorance” of youth that should be heeded in every field because it helps you see things in a different light. We always ask young people for their opinion. It’s very important.

WWD: You talk about being flexible, helped by the fact that your company remains independent. Suitors must have knocked on your door over the years and, in this era of big conglomerates, it’s not easy to preserve your independence.
Yes, we’ve had plenty of offers, but now it’s about three years they’ve been leaving us alone because they know we don’t want to sell. We started our company 27 years ago, with two million lire [Italy’s pre-euro currency] and we treasure our independence.

WWD: Are you interested in the Bourse?
No, we are not thinking of it. I know we emerged as the best candidate for a stock exchange listing among fashion and luxury companies in a [luxury consultant Carlo] Pambianco research. It’s gratifying that the company is seen in a positive light, that it brings profits, but we are not interested. We are a classic, family-run company, which is the classic Italian way and which has helped Italy build its reputation globally. I fear that going public, you can’t express yourself in a spontaneous, easy way. We are free and we don’t have to take shareholders into account. We have become rich, it’s not a secret, but we never did it for the money, but because we love this job. We could have sold to the best offer, but the company is our offspring. I don’t know if it’s beautiful or not, but it’s what we feel, for the time being. Who knows in two years, perhaps? We don’t want to be the richest at the cemetery. What can we do with more money? Yes, we enjoy the notoriety, but perhaps the most beautiful thing is that my parents, who are in their 80s, would never have imagined this. My dad, he tells me he would never have thought that his last name was going to be known globally. I realize from their words what it means. He was a factory worker and my mother a waitress.

(Domenico Dolce arrives from his studio, apologizing for the delay, caused by alterations needed on the collection.)

S.G.: We are different,we work together very well and we are very compatible, but Domenico is a real tailor. He is really surprising, he cuts and sews, but not many people know this because few people have access to his studio. He is very shy. Few are the designers that really do this.
Domenico Dolce:
Many put clothes together, they are stylists, they seek looks and trends. This is a visual world, one of communication, but clothes must be worn, lived in. We look for the right proportions and we are obsessed with the cut.
Sure, you are attracted by the look, but then if you go in our store and try our clothes, they just fit. Many are surprised by our commercial success, but it’s mainly to be attributed to our fit.
This wasn’t considered interesting, but now it’s coming back, because you don’t live on looks alone. Beautiful clothes are revolutionary now. Today, you are surprised if you see beautiful clothes. I’m a Catholic, I usually go to mass early in the morning and I see these old people in their 70s, they have no idea what sportswear or active is; they are wearing coats, furs and hats from the Fifties or Sixties and it’s a strong message of elegance.
[laughs] I ask him if he goes to mass to design collections...
It’s classic elegance. Elegance is always beautiful, contemporary and timeless. It doesn’t have to be about the latest trend, or from a signature brand. It’s forever. Recently, it’s all “trusciume” [in Sicilian, cheap, trashy] — there’s no quality, these fast-fashion companies churning out looks. People thought it was cool, but it’s cheap. You can’t expect quality at 20 euros [$27]. It’s like good codfish at 5 euros [$6.70] — how can it be? But it’s not a matter of price. Elegance is intellectual; it’s about good taste, the cut, proportions, quality, how you carry yourself.
Sometimes I wonder, these famous pens [fashion critics], we think sometimes they really don’t understand anything. We can judge if the clothes are not stitched together well, but do they understand when the clothes are well made?

WWD: What were your first steps in fashion? How did you learn the métier?
I am the son of a tailor [in Polizzi Generosa, Sicily]. I learned on my own, it was never an imposition; I played with pieces of fabrics, because I didn’t have toys. When I was five, I made tiny dresses with fabric roses. The first thing I made on my own was a pair of pants when I was seven or eight. My father, before opening a factory, had separate groups of workers in the studio that did different things, those who worked corduroy, those who worked on the coats, those who did chiffon clothes. We did lots of weddings, served everyone from farmers to aristocrats, and I learned by imitation.
You know how many times they’ve asked us to write a book?…We’ll do it, when we are old. My story is not as interesting. I was born in Milan, I was a graphic designer and an assistant back in 1981 at Giorgio Correggiari’s, where Domenico was first assistant. Domenico taught me to draw.

WWD: Fast-forward to today: You are designers whose success has been achieved through hard work over the years. What was your reaction to Italy’s Supreme Court overturning the ruling earlier this year that absolved you of alleged tax evasion?
D.D.: Our response is simple: We work.
S.G.: Our conscience is clear. The decision is in God’s hands.
D.D.: Silence and work, polemics don’t lead anywhere.

WWD: [to Gabbana, who vented his frustration on his Twitter account after the new ruling, as a number of followers urged the designers to pay all their taxes] After so much silence, your comments on your Twitter were met with angry reactions, too.
S.G.: I’m only human, I was fed up. I was not angry, but I was disappointed. What a shame, I felt…

WWD: Do you feel the ruling was unjust?

S.G.: We pretend it doesn’t exist. It’s not in our thoughts on a daily basis. After two hours it was all gone. Luckily I am not resentful.
D.D.: Tomorrow is another day. We enjoy doing this job with love and we’ve never allowed anyone to interfere with our creativity.
S.G.: Did you see any changes? We’ve actually improved.
D.D.: I get jealous if an assistant touches our clothes. We never did this for money…please write it down. But don’t touch our job or our clothes. This is all that matters.

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