Foto Dolce & Gabbana
The Italian brand has engaged Rothschild & Co. as its financial advisor. It is considering options that would soften credit covenant requirements and provide the company with greater financial flexibility, it reports Bloomberg with reference to sources familiar with the situation.
The decline in demand in the luxury industry has intensified amid geopolitical tensions, including the conflict over Iran, which has a negative impact on key markets, particularly in the Middle East. This region traditionally plays an important role for sales of luxury brands.
According to the latest available data, Dolce & Gabbana’s total bank debt is about 450 million euros. Previously, the company has already conducted refinancing, in which it attracted about 150 million euros of additional financing for the implementation of growth strategy and investment in new areas, including cosmetics and real estate. At the same time, the lenders granted temporary relief on the terms of the borrowings.
Current negotiations are at an early stage, and the final parameters of a possible agreement have not yet been determined. Representatives of the company and Rothschild declined to comment.
Dolce & Gabbana, founded in 1985 by Domenico Dolce and Stefano Gabbana, remains an independent brand and continues to develop under the leadership of its founders.
Difficulties in the market are affecting other players as well. In particular, Valentino’s owners, Kering and Mayhoola, previously agreed to provide additional support for the business after breaching debt covenants.
Against the backdrop of the industry slowdown, consolidation of assets continues: Prada acquired Gianni Versace, and Giorgio Armani’s corporate plans envisage a partial sale of a stake in his group.
Bain & Company and Altagamma estimate that the global luxury goods market will shrink by about 2% in 2025. Increasing geopolitical risks continue to hamper demand recovery and increase pressure on the financial performance of companies in the sector.
