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 group Salvatore Ferragamo warned it was not possible to forecast the full impact of a spreading coronavirus outbreak on its results after posting a 4 percent drop in its 2019 core profit on Tuesday.
The Italian brand “has begun to implement several concrete actions to protect the group and mitigate the negative effects on the financial results of the current year,” it said in a statement.
These measures included monitoring costs as well as limiting investments to essential projects, it said.
In 2019, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 4.3 percent to €205 million and net profit rose by 1.7 percent to €92 million.
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Analysts had expected EBITDA to come in at €206 million and net profit of €89 million, according to a Reuters poll.
Ferragamo, which had already announced that sales returned to grow last year, said it would pay a €0.34 per share dividend, in line with a year ago.
The luxury industry worldwide is facing a major sales hit due the coronavirus epidemic which first emerged in China, home to more than a third of global luxury shoppers, and has now spread to multiple countries, with key manufacturing hub Italy the worst affected nation in Europe.
By Claudia Cristoferi; editor: Silvia Aloisi.
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.