Sales at Salvatore Ferragamo bounced back in the first three months of the year thanks to strong growth in Asia and the United States, adding to signs of a comeback for the luxury goods sector.
Ferragamo, which has been hit harder than most rivals by the fallout of the coronavirus pandemic, said on Tuesday sales had accelerated further in the second quarter — particularly in China, South Korea and the United States. But it added that the market remained volatile and did not give full-year forecasts.
The group posted revenue of 245 million euros ($298 million) in the three months to end-March, in line with analyst expectations and a 13 percent increase from a year earlier when stripping out the impact of currency fluctuations.
Last year Ferragamo, which is more exposed than other luxury groups to travel spending, suffered a 33 percent sales decline and booked its first full-year operating loss since listing in Milan 10 years ago.
The brand, famous for shoes worn by Hollywood stars such as Audrey Hepburn, last month confirmed Chief Executive Micaela Le Divelec at the helm of the group, dampening speculation of an imminent management shake-up, but has parted ways with its creative director, Paul Andrew.
Sales in the Asia Pacific region rose by 52 percent in the first quarter, and now account for more than half of the group’s revenues, while in Europe sales were down due to a new wave of lockdowns in several countries.
The group posted an operating profit of 7 million euros, compared with a 36 million-euro loss a year ago, with a gross margin more than trebling to 19.5 percent thanks to cost cuts.
“Our first focus is to improve group’s profitability, with long-lasting savings”, Deputy Chairman Michele Norsa told analysts in a conference call.
Big groups like Hermès, Kering and LVMH are on course to put the COVID-2019 crisis behind them, with first-quarter revenues already exceeding pre-pandemic levels.
Ferragamo’s sales in the three months to March were below the 317 million euros booked in the same period of 2019.
The group is often cited by industry observers as a possible takeover target, as smaller companies are less able to hedge themselves against changes in trends and tastes. The big conglomerates that dominate the industry have also succeeded in drowning out rivals with major investments in marketing, for example. The health emergency has exacerbated that gap.
However, Norsa, a long-time executive brought back by the Ferragamo family last year to steer the group through the pandemic and a brand revamp, said he was confident Ferragamo could regain its lustre even as a mid-sized, single-brand company.
By Silvia Aloisi and Steve Orlofsky.