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

MILAN: Italian luxury group Dolce & Gabbana has reached an agreement with its lending banks to waive financial covenant breaches and shore up liquidity after reporting a fresh operating loss and higher debt, according to its latest financial statements. The privately owned group’s revenues fell 2% in the fiscal year ending on March 31 to €1. 86 billion ($2. 17 billion), according to a filing seen by Reuters on Tuesday. Growth in the beauty division helped offset a weaker performance in the group’s core fashion business, the company said. Operating loss totalled just over €100 million. Net financial debt increased to €464. 5 million as of March 31 from 379. 6 million euros a year earlier, breaching conditions attached to the group’s bank loans. Under a new agreement, the banks in the lending pool waived remedies related to covenant breaches and suspended covenant testing until March 31, 2028. In exchange, the group committed to complete “extraordinary financing transactions” to strengthen liquidity and to bring its net debt-to-EBITDA ratio under 3 by March 2028. Earlier this year a source said that the company, advised by Rothschild, was exploring ways to raise fresh money, including asset disposals such as real estate. Dolce & Gabbana has raised €150 million by extending its eyewear licence agreement with Essilor Luxottica until 2050, according to the filing.

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