Salvatore Ferragamo Sees Sales Slip in Q4

Salvatore Ferragamo SpA saw preliminary 2017 revenues decline 3.1 percent to 1.34 billion euros, or $1.66 billion at current exchange, compared with 1.43 billion euros in 2016. At constant exchange rates, sales were down 1.4 percent.

Revenues in the last quarter decreased 8.4 percent, penalized by the currencies trend and by lower promotional sales in the primary own-retail channel, thanks to better control of inventories, said the Florence-based group.

As of Dec. 31, the group’s retail network comprised 685 points of sales, including 410 directly operated stores and 275 third-party operated stores. In the 12 months ended Dec. 31, the retail channel was down 0.8 percent to 905.3 million euros, representing 65 percent of total revenues. Like-for-like sales at constant exchange were down 1.7 percent.

The wholesale channel, penalized by destocking activity, the political tensions in South Korea and a strategic rationalization in Japan, decreased 7.4 percent to 465.3 million euros.

The Asia-Pacific area was confirmed as the group’s top market, representing 36.6 percent of total revenues. In the region, sales declined 2.1 percent to 510.6 million euros, penalized by the soft trend in South Korea, mostly due to the significant decrease of Chinese tourists, and the ongoing negative performance in particular in Hong Kong. Conversely, the retail channel in China showed continued growth, posting a 2.5 percent uptick, or 7 percent at constant exchange.

Europe was down 3.6 percent to 351.2 million euros with a positive performance for the retail channel and a negative trend for the wholesale business, negatively impacted by the destocking activity.

Sales in North America fell 4.2 percent to 333.6 million euros, representing 23.9 percent of total sales, also negatively impacted by the performance of department stores.

Japan was down 5.6 percent to 119.5 million euros due to the strategic rationalization of the wholesale channel, while the retail stores showed a positive performance at constant exchange rates.

Revenues in Central and South America grew 2 percent, or 6.5 percent at constant exchange, to 78.3 million, despite the earthquake in Mexico in September.

By category in the year, footwear sales dropped 3.6 percent to 589.2 million euros, representing 42.3 percent of total sales.

Handbags and leather accessories were down 2.4 percent to 516 million euros, accounting for 37 percent of total sales.

Sales of ready-to-wear decreased 3.9 percent to 89.8 million euros, or 6.4 percent of the total. Silk and other accessories fell 7.4 percent to 86.3 million euros. Fragrances were up 1.2 percent to 89.1 million euros.

In February, during Milan Fashion Week, Ferragamo will hold a coed runway show to unveil its men’s and women’s fall 2018 collections, designed by Guillaume Meilland and Paul Andrew, respectively. The show will mark the rtw debut of Andrew, who was previously women’s footwear creative director and was appointed creative director of the women’s line last October. He succeeded Fulvio Rigoni.

In December, the company issued a warning on medium-term targets. Ferragamo said evaluating its development plans and “significant IT and marketing investments, presented by the management, in order to relaunch the brand and to optimize the group’s commercial, production and logistic processes,” the board, headed by chairman Ferruccio Ferragamo, “recognized an extension into the financial year 2018 of the transition phase, that characterized 2017, and its related reflections on the medium-term ambitions.” These, said the board then, would be “more difficult to be achieved.”

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