Voice Over

To speak about Adolfo Domínguez is to tell a story of effort and success in the world of fashion. Born in a family tailoring workshop in Trives, Orense, Adolfo Domínguez always knew that he wanted to dedicate his life to creating clothes that reflected the beauty and elegance of handmade clothing. Thus, inspired by family tradition and the industrialization of the time, he decided to create his own brand in 1976 under his own name, breaking away from the ironed and classic style of the late Franco era to dress the social vanguard with an aesthetic of fluid silhouettes and natural materials. The roughness of linen turned the material into the signature of his designs, and its natural folds inspired him to create his famous phrase‚ "wrinkles are beautiful", reaffirming his ideal that wrinkles are not a defect, but proof of having lived. A brand slogan that reflects his philosophy of appreciating the intrinsic beauty of textiles and people and creating pieces that feel like a second skin for his customers. The firm soon became a success in Spain, reinforcing its reputation by dressing the actors of the famous American series Miami Vice, and not even a fire at the main factory in Orense prevented an international expansion push in 1992, reaching a presence in 700 stores across the globe. Adolfo Domínguez was the first fashion company in the country to go public, and the first Spanish designer to create a namesake fragrance. The brand's commitment to sustainability is reflected not only in its clothing, but also in its stores. The newest retail locations have been designed with bright, open spaces that combine local craftwork with natural materials, such as chestnut and slate. Let's now hear about the next chapter in this story. 

Beatriz

Hi, everyone. I am Beatriz Fernández, a Principal in the Oliver Wyman's Madrid office belonging to the Retail and Consumer Goods industry. Today I am hosting an interview with the CEO of Adolfo Domínguez, Antonio Puente. Hi, Antonio. It's a real pleasure to be here with you at your first flagship store in Madrid.

Antonio

Thank you, Beatriz. The pleasure is mine.

Beatriz

Let's start with a question from your beginnings. I've heard you've spent a significant part of your professional career in Japan. In fact, in 2015 you joined the firm's Japanese offices, first as a Finance Director and then as a Managing Director before moving to the headquarters in Orense one year later. How has your experience in Japan influenced your professional career?

Antonio

The bulk of my career, or the bulk of my adult life, has been in Japan. I went first after graduation from university and I guess I spent... what started out of curiosity, it ended up being close to 20 years. Personally, it's been a journey. I mean, both my children were born in Japan, and professionally I think I've been lucky enough to work for several large corporations. There, I was able to learn dynamics of big business, big organisations, but also coupled with what I would call a high context culture like Japan. And that helps you understand what's said, but also what's not being said. But, you know, it's the understanding and how things move forward that has helped me move to other countries or other places and work in other cultures.

Beatriz

Since your arrival at Adolfo Domínguez the company has undergone a huge transformation. We can look at the results published in press last week: up to 24% sales increase. You decided to take the brand into a new era of management level adjustment, changes to your retail concept and even changing the logo. How did you find the company when you first joined and how has it evolved in the recent years, and even in the recent months?

Antonio

I think trying to put order in the financial part was key in the very beginning, and then also move forward to have a really healthy network of stores. When we started, and when I joined the company in 2016, there had been a prior huge expansion and we probably had double the number of stores that we have right now. What that means is that some of them had become, you know, I don't want to say obsolete, but they were misplaced, and the customers had gone to different streets. We really did an in-depth study store by store to see what levels of profitability we wanted from the stores. And then we tried to reposition the remaining stores to better traffic locations. That was key, I think, in us moving forward, because that saved a lot of fixed costs and also has improved the productivity per square metre, which is a key metric for our market. I think that coupled with all the changes we've made on the product side: merging the three sub brands under Adolfo Domínguez, being clear on the value proposition and coupling it with the sustainability efforts. I think that's what has helped us move forward.

Beatriz

So quite a lot of changes, actually. But there's one thing you've kept: the sustainability pillar, that has remained core, your commitment to sustainability. I've heard that your corporate social policy has always focussed on reducing environmental impact and that you've been pioneers in rejecting the use of non cruelty free materials, and actually enhancing selecting free fabrics and manufacturing concepts to favour the planet. Is that right? Tell me about it.

Antonio

Yes. I think sustainability, and being concerned about the environment, is something that's in the company, almost from the beginning, it's in the DNA of the company. More than ten years ago we started being proactive in, as you mentioned, non cruelty with the animals, and we decided not to use leather in our textile collections. But I think it has evolved quite a bit since these past ten, fifteen years. It has accelerated a lot. There's a lot of legislation and what we're trying to do is bring the spirit of what we want to do in compliance with all the changes that we are seeing in the market. We are looking at things like traceability, raw materials... and all of this under an umbrella of what we call a positive impact long term sustainability plan. This positive impact what it means is not just not to do things that would harm the environment and the planet, but long-term try to have reverse all of that, and whatever activity we do, be positive for the planet. Basically, we also look at things like the durability of the garments, so they last longer, and we couple all of that with a conversation with our customers via our campaigns. We're trying to raise awareness of the problem that we have. If we keep moving forward, we keep doing things the way we do as a society, it will be very, very harmful for the planet. So that's what we're trying to reverse.

Beatriz

We've been speaking about it for the past years: COVID. How did it impact Adolfo Domínguez? Economic slowdown, potential supply chains constraints.. What were the actual implications for a company like Adolfo Domínguez?

Antonio

I think the pandemic for the whole world and for our industry was quite tough at the beginning. It was really difficult to navigate those first few months, first year of the pandemic, especially coming from 2016 to 2019, where we were almost there in terms of showing that we had been able to turn things around. It was a big disappointment on top of everything else. And emotionally it was really hard for the teams and for everyone. But both, Adriana Domínguez, the Executive President, and myself, we always try to see the glass half full. And I think the pandemic allowed us a little bit of more wriggle room to try new things that we wouldn't have tried if things were more stable. We were able to accelerate the transformation that I have been speaking about before. And luckily and happily, we were able to publish results, as you mentioned, last week where we are happy to say that, in terms of revenue, we are at pre-COVID levels with 50 less points of sales. So, every store that we have right now is more productive. Our gross margin is also higher than it was pre-COVID. And also the biggest news is that we were able to turn out profit since the last time, in 2015. So it's great news for us and great news for the team.

Beatriz

So as a way to continue this acceleration, this transformation, growing your revenues and improving your gross margin, you've opted for a set of initiatives: sustainability, that we've spoken about, but this also includes increasing your online sales, expanding your international presence and seeking a greater penetration among younger audiences. Throughout the entire journey, you counted on us, Oliver Wyman, as a partner. What would you actually highlight about this collaboration?

Antonio

Well, I think you just mentioned a few of the initiatives. I think, if we counted them up, they were more than 100 initiatives. For a company like Adolfo Domínguez with a huge legacy, but also trying to make things more efficient and building new processes, it was quite a challenge that I think wouldn't have been possible without the help of Oliver Wyman. I think Oliver Wyman helped us settle some of these improvements that we had already worked on in the past, but also add new ones that we were probably as a team not aware of. And I think the way the teams work with each other, really was key also. And be able to present, as you mentioned, last week results that finally took us across the goal to post positive results at the net result level. So we are really happy on that.

Beatriz

Thank you very much. I'm very happy to hear your words. And it's also been a great pleasure for us to collaborate with you. Last but not least. We've spoken about the challenges that you've encountered and the transformation that you've undergone in the past few years. What about the future? What can you tell me? How does it look like for Adolfo Domínguez?

Antonio

So when we look at the map and we see that we have a really strong brand and a really strong company in our home market, that is a great thing. And I think that's the base for us to start looking outside. I think we see a lot of opportunity in different markets where we are not present right now. We do have subsidiaries in Mexico, Japan, etc., but we see a definite opportunity to grow elsewhere after being successful in Spain. We are also working really hard on engaging with new audiences, and with our current audiences and our current customers, through a loyalty club. That's not going to be just merely a point system. What we want to do is kind of like an umbrella for all the things that we're doing as a brand to engage with the customer. Be the sustainability effort, but also doing runways. We're doing different actions that we think are being disruptive in the market and we're not seeing those elsewhere. So that is taking us towards a new audience and reinforcing the one that we have right now.

Beatriz

Thank you very much, Antonio, and thank you very much, everyone, for listening to us. The conversation was extremely insightful and I am convinced that we will be hearing about Adolfo Domínguez and its success stories in the future. Thanks again.

Antonio

Thank you.