Dolce & Gabbana secures bank debt waiver following €100M operating loss

Italian luxury powerhouse Dolce & Gabbana has reached an agreement with its lending pool to waive financial covenant breaches and stabilize liquidity following a challenging fiscal year defined by weaker core fashion sales and rising debt.

For the fiscal year ending March 31, the privately owned group's total revenues dipped 2% down to €1.86 billion ($2.17 billion). 

While expansion in the brand's beauty division provided some cushion, it was not enough to offset softer performance in core fashion lines.

The company reported an operating loss totaling just over €100 million. Concurrently, net financial debt climbed to €464.5 million (up from €379.6 million the previous year), breaching pre-existing conditions tied to its bank loans.

Under the new arrangement, the lending group has waived all remedies related to the covenant breaches and suspended standard covenant testing until March 31, 2028.

To secure the waiver, Dolce & Gabbana committed to executing "extraordinary financing transactions" aimed at bringing its net debt-to-EBITDA ratio below 3 by March 2028. 

Part of this liquidity injection includes raising €150 million by extending its high-profile eyewear licensing partnership with EssilorLuxottica out to 2050.