Ferragamo Aims to Double Sales Mid-Term but Warns of China Hit

Italian luxury fashion house Salvatore Ferragamo's logo is seen at a store, as the spread of the coronavirus disease (COVID-19) continues, in Zurich, Switzerland January 25, 2021. (Reuters)
Italian luxury fashion house Salvatore Ferragamo's logo is seen at a store, as the spread of the coronavirus disease (COVID-19) continues, in Zurich, Switzerland January 25, 2021. (Reuters)
TT
20

Ferragamo Aims to Double Sales Mid-Term but Warns of China Hit

Italian luxury fashion house Salvatore Ferragamo's logo is seen at a store, as the spread of the coronavirus disease (COVID-19) continues, in Zurich, Switzerland January 25, 2021. (Reuters)
Italian luxury fashion house Salvatore Ferragamo's logo is seen at a store, as the spread of the coronavirus disease (COVID-19) continues, in Zurich, Switzerland January 25, 2021. (Reuters)

Revenues at Italian luxury group Salvatore Ferragamo beat market forecasts in the first quarter despite a decline in retail sales in China because of new COVID-19 restrictions, and the group said it expected to double sales in the medium term.

The leather goods maker, famous for making shoes for Hollywood stars such as Audrey Hepburn, said sales had risen by 21% at constant exchange rates in the first quarter to 289 million euros ($304.72 million) - above an analyst average estimate of 273 million euros.

That was due to a strong performance in Europe and the United States. However, sales were down by 2% in the Asia Pacific region, and the group said retail sales had fallen from the same period of 2021 in China.

Operating profit totaled 24 million euros from 7 million euros a year earlier.

China's zero-Covid policy with heavy restrictions in place in the luxury hub of Shanghai and other cities is set to jeopardize the industry's second quarter performance in a key market, where currently around 50% of luxury stores are closed or operating with reduced traffic, according to a Barclays report.

Analysts say sales in the country could fall by 30 to 50% in the three months to end-June.

Ferragamo CEO Marco Gobbetti said that the group expects to increase revenues this year despite "the rising geopolitical and economic volatility."

Outlining his strategy, Gobbetti - who joined in January from Burberry - said the group aimed to double the marketing and communication spending share of total revenues from 2023, and targeted 400 million euros in investments in 2023-26, focusing on store renovations, technology and supply chain.

Ferragamo also aims to lure younger consumers as part of its revamp.

The group has been under-performing rivals due to lower investments, low online penetration and a product offer perceived as old-fashioned, in addition to a high exposure to travel spending particularly hit by the pandemic.

Analysts generally expect the turnaround to be led by Gobbetti to take time before bearing fruit.

Worries that the curbs in China - where Ferragamo made 30% of its sales in 2021 - could last longer than initially hoped for have triggered a sell-off in luxury stocks, with the family-owned Tuscan group among the hardest hit.

Its shares have fallen 40% since the start of the year, compared to a 24% decline for industry leader LVMH, and shed more than 7% before the results on Tuesday.

That has helped rekindle rumors of a possible takeover, which the Ferragamo family categorically denied on Monday. The announcement that Gobbetti would join as CEO had already dampened M&A speculation at the end of last year.



Saudi Arabia, Japan Announce Partnership to Strengthen Fashion Cooperation

This initiative aligns with the commission's strategic pillars, which include educating local designers, developing the fashion ecosystem, and preserving cultural heritage
This initiative aligns with the commission's strategic pillars, which include educating local designers, developing the fashion ecosystem, and preserving cultural heritage
TT
20

Saudi Arabia, Japan Announce Partnership to Strengthen Fashion Cooperation

This initiative aligns with the commission's strategic pillars, which include educating local designers, developing the fashion ecosystem, and preserving cultural heritage
This initiative aligns with the commission's strategic pillars, which include educating local designers, developing the fashion ecosystem, and preserving cultural heritage

The Fashion Commission and the Japan External Trade Organization (JETRO) have announced a new partnership aimed at promoting innovation and sustainability in Saudi Arabia’s fashion sector.
This initiative aligns with the commission's strategic pillars, which include educating local designers, developing the fashion ecosystem, and preserving cultural heritage.
In this context, the Fashion Commission is hosting an exhibition at its headquarters in Riyadh, running from February 18 to February 20. The exhibition highlights the quality and creativity of Japanese textiles, with a focus on sustainable production methods.
The event features a series of interactive workshops offering valuable educational opportunities for Saudi designers and textile specialists. These workshops aim to equip participants with advanced skills and knowledge while fostering connections between Saudi talents and their Japanese counterparts. Additionally, they help expand professional networks, supporting the growth of local fashion brands.
The exhibition celebrates the rich cultural heritage of both Saudi Arabia and Japan by showcasing the integration of traditional techniques with modern design innovations. It aims to inspire a new generation of designers to explore the intersection of heritage and contemporary fashion.
Chief Executive Officer of the Fashion Commission Burak Cakmak affirmed that this partnership reflects the commission’s commitment to empowering local designers and strengthening the fashion sector. He noted that the exhibition marks a significant step in fostering creative dialogue between Saudi and Japanese talents while driving innovation toward a more responsible and sustainable future.
Managing Director of JETRO’s Riyadh office Shiro Akiyama emphasized that this collaboration strengthens the long-standing trade relations between the two countries and opens new avenues for mutual cooperation in the fashion and textile sectors.