Dolce&Gabbana closes the financial year on March 31st with declining revenues and a new operating loss, while net financial debt grows and leads the group to violate some covenants provided for in the financing contracts.
The Milanese luxury house founded by Domenico Dolce and Stefano Gabbana has therefore reached an agreement with the pool of creditor banks to obtain a waiver of corrective measures linked to the violation of financial parameters and strengthen its liquidity position. Reuters reports it.
Revenues dropped to 1.86 billion (loss over 100 million)
In the financial year ended March 31, according to the documents seen, the Milanese company’s revenues fell by 2% to 1.86 billion euros. The growth of the beauty business contributed to supporting the result, which only partially offset the weaker performance of the core fashion business. On the profitability front, Dolce&Gabbana recorded an operating loss of more than 100 million euros. At the same time, net financial debt increased to 464.5 million from 379.6 million in the previous year. The increase in indebtedness led to the failure to comply with some of the financial covenants (guarantee clauses) envisaged by bank loans.
“Extraordinary financing operations”
In light of the situation, the group has reached a new agreement with the consortium of financing institutions. The banks have renounced the corrective measures related to violations of the covenants and have suspended the verification of compliance with the financial parameters until 31 March 2028. The agreement, however, provides specific commitments for the group, which will have to complete some “extraordinary financing operations” (including the sale of properties) aimed at strengthening liquidity and bringing the ratio between net debt and ebitda below 3 times by March 2028.
The agreement with the banks therefore arrives at a delicate phase for the group, grappling with the weakness of the fashion sector and the need to rebalance the financial structure. The growth of beauty represents one of the main elements of stability of the business, but it was not sufficient to prevent the decline in revenues and the return to an operating loss.