Adolfo Dominguez S.A. - Expanding Lines for the New Century
Expanding Lines for the New Century
Dominguez had in the meantime expanded beyond its core menswear collections. In 1986, the company entered the women's fashion sector as well, releasing its first collection that year. Dominguez also began to extend the brand into a full range of accessories, including footwear, handbags, jewelry, and, in a licensing deal with Myrugia, perfumes. The company itself handled most of its accessories production, contracting out only for silks, from China.
By the early 1990s, Adolfo Dominguez had boosted its sales to more than $55 million, and its number of company-owned stores past 12, and franchised stores to 15. The company also had greatly expanded its Orense facility, adding four new factories to support its diversified production. At the same time, Dominguez expanded its labels, adding the casual look Dominguez Basico, and new line of men's clothing, Almacen Dominguez, featuring printed shirts, sweaters, and sportscoats.
Yet, disaster struck the company in 1991, when a fire destroyed its Orense headquarters. The company was forced to restructure and lay off nearly one-third of its employees. But Dominguez soon turned the disaster to its advantage. The company decided to adopt a vertically integrated structure—including taking on its own distribution, eliminating its wholesaler middlemen—and adopting just-in-time manufacturing techniques in its rebuilt factories.
Of importance, Dominguez also decided to convert the substantial cost savings gained through its restructuring into lower pricing policies for its clothing. Most of the company's clothing now could be sold for 30–40 percent less than before the restructuring, and even up to half the price. Yet the company was careful not to sacrifice its reputation for quality. These decisions helped Dominguez flourish despite the onset of a long economic recession in its core European and overseas markets.
Dominguez expanded strongly through the 1990s—by the mid-2000s, its Spanish retail network had grown to 93 company-owned stores, with nearly 140 more franchised stores. Into the mid-1990s, the company's foreign presence remained limited to its London and Paris stores. The company, with its reduced pricing in place, launched a renewed international expansion at this time, starting with the opening of its first store in Portugal in 1994. The company continued to build up its European presence, notably in France, then entered Belgium in 1997.
The company also began an expansion deeper into the Asian market, signing agreements to introduce its designs via a number of third-party retailers in Malaysia, Singapore, and Taipei. In 1997, the company attempted a return to the United States, this time through the opening of a number of in-store "corners." In the meantime, the company abandoned the Almacen Dominguez label in favor of a new casual label, Golf, launched in 1995.
Dominguez went public in 1997 in order to fuel its further expansion. The highly successful initial public offering was oversubscribed some 300 percent, and placed some 70 percent of the group's stock on the public market. Adolfo Dominguez himself kept his 30 percent stake and, together with allies, controlled a majority block of more than 50 percent of the company's stock.
This controlling block came into good stead in 2001, when rival Spanish clothing group Cortefiel launched a takeover attempt for Dominguez. In the end, however, Adolfo Dominguez and other shareholders rejected the offer, for some EUR 78 million ($72 million), as too low.
Dominguez now turned its attention to future growth. In 2001, the company launched a new youth-oriented label, Linea U, to compete with fast-growing competitor brands such as Zara, owned by Inditex, and Cortefiel. The company also continued in its attempt to add new markets, entering Argentina with its first store in the early 2000s. In 2002, the company again returned to the United States, this time opening a store in Miami. By then, the company had added operations in Mexico, China, and Luxembourg.
Like most retailers, Dominguez was hit hard by the global recession at the beginning of the 2000s. Nonetheless, the company remained one of Spain's leading fashion labels, backed by an international network of more than 300 company-owned and franchised stores. By the end of 2004, Dominguez had boosted its sales to EUR 130 million ($176 million). With Adolfo Dominguez remaining at the helm, the company set its sights on new growth in the new century.
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