Dolce & Gabbana secures debt waiver from banks after FY operating loss

Italian luxury fashion house Dolce & Gabbana has secured a debt waiver from its lending banks following a fiscal year marked by a decline in profits and an increase in debt, according to the company's latest financial statements. The group's revenues declined by 2% in the fiscal year ending on March 31, 2023, to €1.86 billion ($2.17 billion), as reported by Reuters on Tuesday.

Growth in their beauty division helped counterbalance a weaker performance in their primary fashion business, the company stated. The overall operating loss amounted to just over €100 million. Net financial debt rose to €464.5 million as of March 31, 2023, up from €379.6 million a year earlier, breaching the terms of their bank loans.

Under a new agreement with their lenders, the financial covenant breaches have been waived, and covenant testing has been suspended until March 31, 2028. In return, Dolce & Gabbana has committed to executing "extraordinary financing transactions" to bolster liquidity and ensure its net debt-to-EBITDA ratio falls below 3 by March 2028.

Earlier this year, a source hinted that the privately owned group, advised by financial firm Rothschild, was exploring methods to raise additional funds, potentially through asset disposals such as real estate.

In a bid to raise capital, Dolce & Gabbana has recently extended its eyewear licence agreement with Essilor Luxottica until 2050, securing a €150 million boost, as per the company's filing.