Anticipated Revenue Dips Expected for Ferragamo in 2024
Ferragamo Struggles Continue as Revenue Declines
Italian luxury fashion brand, Salvatore Ferragamo, has reported a third-quarter revenue decline of 9.6%, marking the fourth consecutive quarter of decreased earnings this year. The company's year-to-date revenue stands at 744 million euros, a 11.9% decrease from the same period last year.
The decline in revenue has been attributed to a challenging macroeconomic and consumer environment by outgoing CEO and General Manager, Marco Gobbetti. Gobbetti, who is set to depart in March 2025, stated that the current context adds pressure on the company's top-line and profitability, delaying the delivery of its financial objectives.
EMEA net sales were flat at 0.6%, while net sales in the Asia Pacific region fell nearly 21% year over year. The Asia Pacific region, according to Gobbetti, has had the biggest impact on Ferragamo's overall sales performance. Conversely, the company reported positive performance in Europe, Japan, and Latin America, but this was offset by weakness in the Asia Pacific region. Net sales in North America fell 7.4%, and the DTC net sales for Ferragamo fell 7.5% year over year.
The wholesale segment, which accounts for a significant portion of Ferragamo's revenue, saw net sales fall 14.1% year over year, due to weaker demand, particularly in the U.S. The company's third-quarter revenue was reported at 221 million euros, or approximately $240 million.
The decline in revenue has been a trend across the luxury fashion industry. Luxury brands such as Kering, Burberry, Lanvin, and others have reported revenue decreases, while Prada and Hermès have reported increased revenue.
Ferragamo has not yet named a successor to Gobbetti, with Paolo La Morgia stepping in as interim CFO. The company expects the revenue decline trend to continue into the last part of the year, with Gobbetti attributing the decrease in Asia Pacific to low consumer confidence.
HSBC Global Research has predicted that luxury struggles would persist, and Ferragamo has stated that its operating results for the full year are expected to 'be at the lowest end of analysts' current estimates.' The company did not provide specific figures for its full-year outlook.
Despite the challenges, Ferragamo reported growth in Japan, with sales increasing 3.4%. The growth was attributed to double-digit growth in DTC in the region.
As Ferragamo navigates these difficult times, it remains to be seen how the company will recover and who will take the helm as the new CEO.
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