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 — Italian luxury goods group Salvatore Ferragamo still has work to do to turn itself around, its chairman said on Monday, as the company warned currency swings and a bias in sales towards lower-margin goods could hit results this year.
The Florence-based group, which issued a profit warning in December, has been battling falling sales and profitability, partly due to a clean-up of inventories.
The shoemaker parted ways with Chief Executive Eraldo Poletto in March a year after he unveiled an ambitious plan aimed at refreshing the style of its products and increasing its appeal to a younger clientele.
"We have to work, we still have a lot to do," executive chairman Ferruccio Ferragamo said on Monday, adding the group was focusing on its organisation and products, as well as containing costs.
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Ferragamo said the group would press on with the strategy started under Poletto but would put on hold "everything that is very costly."
Last month, the family-controlled company appointed a Gucci executive — Micaela Le Divelec — as general manager of the group, postponing the choice of a new CEO.
Ferragamo reiterated he hoped the new CEO would come from within the company.
The group said 2018 sales and margins could be undermined by currency swings and an unfavourable distribution of sales through its various sales channels, after posting first quarter results in line with expectations.
Although like-for-like sales in the first three months of the year were up 0.3 percent, sales in its retail channel - two thirds of total revenues - were down 3.6 percent at current exchange rates.
That was partially offset by a rise in wholesale revenues, up 2.6 percent.
By Giulia Segreti; Editor: Mark Potter.
The luxury goods maker is seeking pricing harmonisation across the globe, and adjusts prices in different markets to ensure that the company is”fair to all [its] clients everywhere,” CEO Leena Nair said.
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.