The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
MILAN, Italy — Salvatore Ferragamo will focus on boosting profits this year to combat lower growth in the luxury industry as a whole, its outgoing chief executive said on Sunday.
Slower economic growth in China, plunging oil prices, volatile exchange rates and security threats that have curbed tourist flows have all put the brakes on spending on upmarket handbags, shoes and other accessories.
Ferragamo posted a larger-than-expected 5 percent rise in first-quarter core profit in May but revenue fell 2 percent to 321 million euros ($362 million).
Speaking before the brand's menswear show at Milan Men's Fashion Week, Chief Executive Michele Norsa said the luxury sector would have to focus on managing risks.
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"Growth will not be as strong as in past years, when the Chinese economy and new markets have been opportunities for the industry," said Norsa.
He said Florence-based Ferragamo, whose founder designed ballet shoes for Audrey Hepburn, is on track to continue increasing profitability and that it would not be affected if Britain voted to leave the European Union.
Ferragamo will continue to focus on widening the profit margins on its products rather than pushing sales, "given the growth of volumes will be hard to forecast", Norsa said.
Norsa, who has been at the helm of the luxury group for a decade and presided over its stock market debut in 2011, is due to leave by the end of the year. He will be replaced by Eraldo Poletto, former head of handbag maker Furla.
Ferragamo's shares have more than doubled in value in the five years since the listing, but have slid 9 percent so far this year as the luxury industry faces weakened demand.
By Giulia Segreti; editor: David Clarke.
Hermes saw Chinese buyers snap up its luxury products as the Kelly bag maker showed its resilience amid a broader slowdown in demand for the sector.
The group’s flagship Prada brand grew more slowly but remained resilient in the face of a sector-wide slowdown, with retail sales up 7 percent.
The guidance was issued as the French group released first-quarter sales that confirmed forecasts for a slowdown. Weak demand in China and poor performance at flagship Gucci are weighing on the group.
Consumers face less, not more, choice if handbag brands can't scale up to compete with LVMH, argues Andrea Felsted.