Layoffs appear to be in the pipeline at Dolce & Gabbana, according to industry sources.
The Italian fashion house is allegedly planning to lay off employees, mostly in its two factories in the towns of Legnano, about 13 miles outside of Milan, and Incisa in Val d’Arno, in the Tuscany region.
The company founded by Domenico Dolce and Stefano Gabbana is rationalizing its workforce because “the company needs a leaner structure. Fixed costs have spiked drastically and the new management wants to prepare the company for a public listing,” said a market source.
As reported in July, former Gucci chairman and chief executive officer Patrizio di Marco is a member of Dolce & Gabbana’s board and an independent adviser. Market sources contend di Marco’s role is much bigger and he is actively visiting the manufacturing plants and speaking to employees. Di Marco left Gucci on Jan. 1, 2015, followed shortly afterward by creative director Frida Giannini, who is married to di Marco. The executive joined the Florence-based firm in 2009, succeeding Mark Lee. Prior to that, di Marco played an instrumental role in turning around Bottega Veneta as president and ceo for eight years.
Di Marco did not return a request for comment on Thursday, while a Dolce & Gabbana spokeswoman said the company was closed for the summer holidays and no one was available to comment.
Sources in Milan speculate that his arrival at Dolce & Gabbana could be preparatory to a public listing.
In July, online news outlet Legnanonews.com related that the unions have “asked explanations” of Dolce & Gabbana representatives “in light of the concern of employees over the company’s situation” and that they were demanding a meeting. “The head of personnel denied the existence at the moment of a restructuring plan and in response to our request specified that no personnel reduction is planned, while the move to Lonate Pozzolo [Italian town] and other sites is normal,” stated the unions on Legnanonews.com. The unions concluded that “over the next few months, we’ll see if the facts will prove this true.”
The strategy of the firm is to rethink the entire organization, transforming the company from a family-owned enterprise to a public company.
A market source told WWD that “Gucci’s former chairman and ceo is the mastermind behind the layoff of 1,000 workers at Dolce & Gabbana.” It is believed that the job cuts are part of a more extensive restructuring plan di Marco will present to modernize the company, making it leaner and more flexible.
In the fiscal year ended March 31, 2015, the Italian fashion group reported revenues of 1.05 billion euros, or $1.39 billion at average exchange rates. At the end of March, the group counted 4,547 employes and a distribution network of 323 stores.
The cuts will marginally concern the structure of the company’s Milanese headquarters, but focus instead on the brand’s clothing factory in Legnano and accessories plant in Incisa in Val d’Arno, a small town near Florence. Negotiations with trade unions should start in September, after the summer holidays in Italy, even if the industrial plan has been approved by Domenico Dolce and Stefano Gabbana as well as by the board formed by Dolce’s siblings, Alfonso Dolce and Dorotea, general director Cristiana Ruella and Giuseppina Cannizzaro, Domenico Dolce’s niece who joined the board in May at the same time as di Marco.
One source said Dolce & Gabbana’s decision in 2011 to end the D&G line and fold it into the signature line has impacted the group’s structure.
Prior to the closure of D&G, the company had increasingly invested in the line, following the termination in 2005 of its 12-year relationship with Ittierre, part of the now-defunct IT Holding, and taking operations in-house with the spring 2007 season. Case in point: the firm had built a $48 million D&G headquarters in Milan, a 54,000-square-foot structure containing the brand’s showroom, commercial offices and press offices, with specifically designed Ron Arad furniture.
Milan-based marketing and strategic consultant Armando Mammina said closing the D&G line showed “great courage and a strategic vision on the signature line on which nobody would have wagered. The facts proved the designing duo and the management right.”
Mammina said it was “probable” the structure dedicated to D&G remained in-house, creating an “overlap of roles.” In light of a public listing or a restructuring of the company, it would be only natural to reorganize the firm with new profiles and “more industrial dynamics” to which di Marco is accustomed.
Marketing and communication tools “more in line with a luxury holding” will be necessary to support this growth and reorganization, he added, “strengthening its corporate communication and a very precise brand aesthetic separated from the collections’ style and cultural context they draw from.” He believed Dolce & Gabbana is very capable of achieving this.
Separately, this fall, Dolce & Gabbana is expected to open a new three-story flagship on the corner of Via Montenapoleone and Via Bagutti in Milan. It is the same building that formerly housed the Ralph Lauren boutique, located in the city’s Golden Triangle luxury shopping district.