In its recently released annual report for the period ending March 31, Dolce & Gabbana SRL is reporting good news…very good news. Sales were up almost 20% (809.5 million Euros/$987.6 million), resulting in net profits up 11 % (108.8 million Euros/$132.7million). "We are growing on all fronts," Cristiana Ruella, director of general affairs, told WWD. "We have a growth that is very homogenous," explaining that up-and-coming markets like China, in addition to product categories like accessories, are presenting exciting opportunities for yet more growth. When the sales of D&G for spring 2007 are included - their lower line which is now back in-house after more than a decade of being under license to IT Holding and rakes in around 250 million euros ($315 million) annually – sales for Dolce will top 1 billion euros, which puts the company in the same league as Prada Group, Max Mara, and Giorgio Armani. It's a good benchmark," explains Ruella about Armani’s 1.43 billion euros in sales for last year. "The integration of D&G will allow us to make a large jump." Part of the reason that Dolce continues to resonate with consumers is the design duo’s creative independence – stemming from the fact they don’t have stockholders, investors, and the like to answer to. "Today, Mr. Dolce and Mr. Gabbana are free to make decisions they deem are the best ones without being limited by anything," explains Ruella about why the company has no plans to go public, and how their business plan for directly managing D&G is based on “quality” rather than straight numbers. "We intend to continue along the growth path of the last few years, and at the same time retain our independence," agree Domenico Dolce and Stefano Gabbana. "This will allow us to fully develop the still-unrealized potential of our brands and the markets in which we operate." In terms of customers, the company’s customers are primarily European: - Europe: 72% of total wholesale - U.S.: 12% - Japan: 4% - Rest of Asia: 7% "America has never been as [proportionally] big a revenue generator for us as it has for other brands," notes Ruella, "so I still see America as an opportunity rather than as a concern." The company is also considering China a growth area, having opened boutiques in Beijing & Shanghai this year, with a second Hong Kong boutique opening in December. "It's a country that has a luxury sensibility," notes Ruella. A franchised store in Lebanon is opening by the year’s end, as well as a company-owned flagship in Barcelona. Stateside, the Madison Avenue store is being updated to bring it in line with the Milan, Paris and Los Angeles flagships by summer of 2007. The company currently has 206 stores, of which 121 are run by their distribution partners, and 85 are directly operated; D&G has 55.

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