MILAN — Could the lettering splashed on D&G’s fall runway be part of the word “goodbye”?

This story first appeared in the March 3, 2011 issue of WWD. Subscribe Today.

According to sources here, Dolce & Gabbana is considering incorporating the D&G line into its signature line — an unexpected development, given that D&G has been a significant driver of the company’s growth.

“[Domenico Dolce and Stefano Gabbana] want to focus on one single brand, Dolce & Gabbana,” said one Italian retailer, who requested anonymity. “I don’t understand, because D&G is a line that makes 400 million euros [$531 million], it’s young and flexible and it’s doing really well. It’s a lot to ask retailers. In my case, for example, I don’t carry the signature line, but I’ve never missed a season with D&G. Domenico and Stefano are clever, though, so they must have thought this out and consider it a wise strategic move.”

If the designers go ahead with the move, it could expand the scope of the Dolce & Gabbana line, although it couldn’t be learned at press time which classifications it would cover. One source said the designers may also provide younger, capsule flash collections to stores in addition to their main line.

A Dolce & Gabbana spokeswoman said the company had no comment.

Another Italian retailer said the designers will “place everything under the same umbrella, will be able to expand the Dolce & Gabbana assortment and cover every category, down to T-shirts.” This retailer views the potential decision positively, since the designers would be able to rationalize costs and investments. “The two lines sort of cannibalized each other. There was some confusion surrounding them, and the D&G pricing was too close to that of Dolce & Gabbana,” said the retailer.

“They made a mistake two years ago when they repositioned the first line, moving it upscale,” said another retailer. “D&G is too expensive, and there’s been some confusion about its positioning and merchandising.”

The retailer was surprised by the apparent move, as D&G “is very strong in Asia and Eastern Europe, more than the signature line.”

Armando Branchini, deputy chairman of Milan-based consultancy InterCorporate, concurred. “They need to cultivate multiple consumer targets and different price points, and to scratch the D&G brand is a bold decision. In light of its awareness in new markets, especially Asia, it could be a mistake,” he said.

In fact, one Russian retailer said D&G “is doing really well in Russia, even better than Dolce & Gabbana. It’s more commercial and less expensive.” The retailer said that while no official announcement has been made, it is understood the last D&G collection will be for spring 2012. With the fall 2012 season, D&G will be combined under the Dolce & Gabbana label, according to this retailer.

A retailer from the Middle East said he had “heard the focus is on Dolce & Gabbana. Perhaps they want one big brand, like Prada or Louis Vuitton.” That said, he added that D&G is performing “very well” in the area. “It’s nice and contemporary.”

What this all may mean for D&G’s profitable licenses — such as fragrances with Procter & Gamble Co.’s Global Prestige Products division, or eyewear with Luxottica — remains to be seen. D&G launched its latest Anthology collection of five fragrances in September 2009. At the time, industry sources estimated the D&G Fragrance Anthology could generate as much as $400 million in retail sales in its first year of launch. A sixth scent was added to the collection, and rolled out from September last year. The Italian fashion company inked a license deal with P&G Prestige Products — P&G’s fine fragrance business unit — in December 2005.

The company has increasingly invested in D&G since it terminated its 12-year relationship with IT Holding’s Ittierre in 2005, taking operations in-house with the spring 2007 season. The firm built a $48 million D&G headquarters in Milan, a 54,000-square-foot structure for the brand’s showroom, commercial offices and press offices, with specifically designed Ron Arad furniture. The designers started emphasizing that D&G was a separate collection with its own spirit and style. On the manufacturing front, the company doubled the size of its factory just outside Milan and earmarked an ample part of the 430,000-square-foot plant for D&G.

The company evolved the brand into a higher-end, quality line with a new store concept and a new logo, stripped of “Dolce & Gabbana” under the signature initials, in fall 2009, investing in a global retail project. “It’s less about disco dancing and denim and more of a signature line,” said Gabbana at the time.

Perhaps the first signs of what appears to be a new strategy can be traced back to spring 2010, when the company said it planned to concentrate its investments in Japan on its signature brand and end distribution of the D&G collections there, starting with the fall season. Cristiana Ruella, managing director and board member, said at the time that the economy in Japan had “nothing to do” with D&G’s new strategy. The stores there did not reflect the new positioning of the brand, said Ruella, adding that Dolce & Gabbana Japan K.K. was continuing operations with the goal of “strengthening and increasing attention on” the Dolce & Gabbana brand. In its focus on the Asia Pacific area, however, two new D&G boutiques opened in Shanghai last spring, coinciding with Shanghai’s Expo.

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