MILAN — Dolce & Gabbana published its third-ever annual report and once again the company showed double-digit growth in both profits and sales.
The designer company posted a 34 percent jump in net profits to 55.5 million euros, or $65.5 million, for the year ended March 31. Sales climbed 23 percent to 585.1 million euros, or $689.2 million. Currency conversions were made at average exchange rates during the period.
The growth in those figures is slower than the 78 percent net profit leap and 50 percent revenue jump the company saw the year before, but the results were still enough to earn Dolce & Gabbana an award for having the best Italian balance sheet. Consultancy Bain & Co. and financial newspaper Il Sole 24 Ore are honoring the company tonight.
The report said that earnings before interest and taxes grew 38.5 percent to 99.8 million euros, or $117.8 million. Earnings before interest, taxes, depreciation and amortization advanced 34.5 percent to 120.2 million euros, or $141.8 million.
“The results for fiscal 2003-04 are the outcome of an investment strategy focused on the core business, which, over the years, has enabled Dolce & Gabbana to win growing market approval,” the annual report stated.
Neither the designers themselves nor company executives could be reached at press time regarding the report.
Looking at consolidated revenues for the year, industrial sales — or wholesale — made up 51.4 percent of the total, while retail sales made up 36 percent. Licensing revenue comprised 12.6 percent.
Retail sales grew 41.5 percent to 210.7 million euros, or $250.1 million. In particular, Italian retail sales advanced 19.9 percent and those in the rest of Europe increased 27.7 percent. Sales in the U.S grew 15.6 percent despite a weak dollar-to-euro exchange. Sales in Japan doubled as the company consolidated stores there it has recently bought back from licensees.
The company also revealed that wholesale revenues, meaning sales of Dolce & Gabbana and D&G branded products, both by the group and through its licensees, rose 15 percent to 867.5 million euros, or $1.02 billion.
Ready-to-wear, which made up 50 percent of the total, saw its wholesale sales grow 10.7 percent to 434.7 million euros, or $512.9 million. Sales of fabric accessories increased 15.5 percent to 44.4 million euros, or $52.4 million, while those of leather goods and footwear rose 12.5 percent to 69.3 million euros, or $81.8 million. Revenues from fragrances, eyewear and watches, which collectively make up a significant portion of the whole, climbed 22.2 percent to 319.1 million euros, or $376.5 million.
At the wholesale level, the Dolce & Gabbana brand made up 54.2 percent of sales, while D&G generated the remaining 45.8 percent. Meanwhile, the company’s strategic focus on men’s wear is increasing sales in that market. Women’s lines accounted for 61.5 percent of wholesale volume, while men’s accounted for 38.5 percent, up 3.8 percent from the previous year.
Other salient components of the report include an in-depth look at the company’s investments in communications. Dolce & Gabbana said it invested 65.8 million euros, or $77.6 million, last year, up about 8 percent from the previous 12 months, on advertisements, fashion shows, publicity events and the production of communications materials.
The company spent most of its communications budget in Italy and the rest of Europe, representing 22.9 percent and 44 percent, respectively. The U.S. made up 19.5 percent, and Japan, 4.5 percent. Another 2.7 percent of the budget went toward the rest of Asia and 6.4 percent was designated to other countries of the world.
The company said that media spending accounts for about 85 percent of the budget with the focus on periodicals, though it is buying more ads in daily newspapers to target certain markets where Dolce & Gabbana has stores. The company said that advertising spending is rising in certain countries earmarked for growth and decreasing in more mature markets such as Italy.
Other significant business developments and events published in the 64-page glossy volume include:
- Making capital expenditures of about 39 million euros, or $46 million, including 25.1 million euros, or $29.6 million, for expanding production plants and other tangible assets. The remaining 21.7 million euros, or $25.6 million, went toward opening stores.
- Opening 19 stores, including the first Dolce & Gabbana and D&G stores in Germany and a D&G store in London. The total store count at the end of March was 41 Dolce & Gabbana stores and 32 D&G stores.
- Reducing net debt by 58 million euros, or $69.6 million, to 33.8 million euros, or $39.9 million.
- Writing down the value of its 5 percent stake in eyewear licensee Marcolin by 2.5 million euros, or $3 million, to 700,000 euros, or $826,000.
- Creating two new offices within the company, one to handle development in Asia and the other to coordinate international brand image.