"Koreans Just Won't Budge": Even with Kim Kardashian and Moon Gayoung, This Luxury Brand Has Never Turned a Profit [Luxury World]

Polarization in Korea’s Luxury Market
Dolce & Gabbana Posts Five Consecutive Years of Losses After Reentry
Sales Decline for Three Years in a Row
Expansion of Cheongdam Flagship and Department Store Presence Fails to Capture Market

For Dolce & Gabbana, the Italian luxury brand, the Korean market remains an impregnable fortress. After having previously withdrawn from the country, the company re-entered five years ago by establishing a direct legal entity. Despite reopening its flagship store in Cheongdam-dong and expanding aggressively by opening stores in major department stores, Dolce & Gabbana has not managed to turn a profit once since its reentry.

Actress Moon Ga-young. Dolce & Gabbana Beauty Instagram.

According to the Financial Supervisory Service's electronic disclosure system on July 2, Dolce & Gabbana Korea's sales last year amounted to 11.9 billion won, down about 7% from the previous year. The operating loss was 11.8 billion won, a decrease from the previous year's 14.8 billion won, but this still marked the fifth consecutive year of losses. The net loss for the period reached 170 million won, failing to turn a profit. Sales have declined for three consecutive years since hitting 14.2 billion won in 2022.

Dolce & Gabbana has experienced significant ups and downs in the Korean market. After first entering the market in 1997 through Shinsegae International, the company withdrew in 2018 due to poor performance and the termination of its contract. It then declared its return by establishing its own Korean legal entity and opening a flagship store in Cheongdam-dong. The brand also expanded its distribution network by opening stores in major department stores. Internationally, it positioned global celebrities such as Kim Kardashian as ambassadors, while domestically selecting Hwa Sa, actor Moon Gayoung, and NCT’s Doyoung as global ambassadors. However, despite these aggressive investments, the company failed to achieve the anticipated results.

Within the industry, there is speculation that Dolce & Gabbana may once again downsize its presence in Korea. Last year, the company prevented capital erosion by converting 31.7 billion won in loans from affiliated companies into equity, yet accumulated deficits still total 22.5 billion won. The parent company is also facing increasing management burdens. According to foreign media outlets such as the Financial Times, co-founder Stefano Gabbana stepped down as chairman earlier this year. Dolce & Gabbana is reportedly carrying debt of approximately 450 million euros (about 796.4 billion won).

This is not due to a decrease in overall luxury consumption. Global consulting firm Bain & Company forecasts that the global personal luxury goods market will grow by about 4% this year, from 358 billion euros (633.3091 trillion won) last year to 373 billion euros (659.8444 trillion won).

However, consumer criteria for selecting luxury brands are changing. Rather than ostentatious consumption centered on prominent logos and flashy designs, there is a growing trend toward "quiet luxury," which values materials, craftsmanship, and quality. This shift is cited as a reason why Dolce & Gabbana, known for its strong brand image and bold prints, has struggled to expand its presence in Korea.

There is also analysis that the polarization of luxury consumption is intensifying, with demand concentrating on so-called "EruSha" brands—Hermes, Chanel, and Louis Vuitton—making it increasingly difficult for mid-tier brands to maintain their market position.

In fact, other luxury brands have seen mixed results. Valentino's sales last year dropped 22.9%, from 47.4 billion won to 36.6 billion won, and its operating profit fell 49.5%, from 3.3 billion won to 1.7 billion won. Fendi's sales decreased 26.2%, from 118.8 billion won to 87.7 billion won, with operating profit dropping from 3.6 billion won to 2.6 billion won. Burberry's sales in 2024 declined by 15.1% from the previous year to 279.6 billion won, and operating profit fell by 15.2% to 19.6 billion won.

On the other hand, so-called "EruSha" brands—Hermes, Chanel, and Louis Vuitton—continued their growth. Hermes saw its domestic sales rise by 16.7% last year to 1.1251 trillion won, with operating profit increasing 14.5% to 305.5 billion won. Chanel's domestic sales exceeded 2 trillion won for the first time, and its operating profit climbed 24.6%, solidifying its position as the top luxury brand in Korea. Louis Vuitton's sales also rose by 6.1% to 1.8543 trillion won, with operating profit jumping 35.1% to 525.6 billion won. Loro Piana, a leading example of "logoless luxury," saw both sales and operating profit increase by 16.9%.

An industry insider commented, "In the past, most brands grew together as the luxury market expanded, but recently, consumption is increasingly concentrated on the most preferred brands. As brand recognition alone is no longer enough to attract consumers, competition among mid-tier brands will become even fiercer."

This content was produced with the assistance of AI translation services.