Ferragamo profit plummets 73%

Dive Brief:

• Salvatore Ferragamo revenue dropped 12.8% in the first half of 2024 to 523 million euros, or about $564 million, according to a Thursday release.
• Net profit in H1 dropped 73.2% to 5.7 million euros, compared to 21 million euros year over year, and EBIT was down 40% to 28 million euros.
• By category, apparel saw the biggest loss, with a net sales drop of 22% for the period. Footwear, leather goods and silk all saw percentage declines in the low double-digits.

Dive Insight:

Ferragamo’s Q1 year-over-year decline of 6% was considerably less than the 18% decline it reported in the company’s first quarter. However, the company is still grappling with a luxury sector slowdown in the fashion industry. Kering, LVMH and Burberry all posted year-over-year earnings declines in July.

“The second quarter showed again some of the encouraging underlying operating trends that we started to see earlier in the year,” Ferragamo’s CEO and general manager, Marco Gobbetti, said in the release.

Net sales in every region declined in H1, with the largest drop coming from Asia Pacific, which was down 17%, excluding Japan. Europe was down 16%, and North America, Central and South America, and Japan all saw single-digit declines.

Gobbetti said the company’s aggregate financial results in the second quarter “were significantly impacted by the challenging consumer environment,” noting that the Asia Pacific region was especially challenging.

“We have also continued to experience weakness in the wholesale channel, exacerbated by more selective distribution strategy,” Gobbetti said.

Wholesale was down 23% in the half, and DTC declined 8%.

“In a general context of ongoing demand slowdown, we will continue to focus on top-line performance and profitability, expanding our audience and boosting engagement through a refreshed product offer, a full funnel marketing approach, an enriched customer experience with tailored CRM initiatives and a new store concept,” Gobbetti said.