The Italian luxury brand reported lower sales in all markets except Japan, and in all channels. It expects operating income for 2024 to be modest.
It’s not just LVMH that’s suffering from a sluggish luxury goods market, particularly in China.
Ferragamo not only announced disappointing third-quarter sales, but also warned that its 2024 results would be in the low range of expectations.
Below analysts’ consensus
Down 7.2% at constant exchange rates and 9.6% at current exchange rates, sales for the Italian luxury goods house finally came in at just 221 million euros in the third quarter, compared with analysts’ consensus expectations of 229 million euros…
“The decline in consumer confidence is particularly noticeable in Asia-Pacific, which was the main negative factor in our sales performance,” said Marco Gobbetti, Managing Directorl since 2021, during the post-results conference call with analysts.
More generally, the House also referred to “a difficult macroeconomic and consumer environment, a situation that is expected to continue in the latter part of the year”.
Ferragamo’s CEO stressed that “the current context” was adding “pressure” on sales and profitability, “thus delaying the achievement” of its financial targets. As a result, he expectsoperating profit for fiscal 2024 to be at the lower end of analysts’ current estimates, at around 30 million euros ($32.7 million).
Japan, the only market on the rise
In more detail, all markets (with the exception of Japan) and channels declined in the third quarter, but to varying degrees.
Geographically, the Asia-Pacific region (excluding Japan) posted the most spectacular fall (-16.7% at constant exchange rates and -18.1% at current exchange rates to 216.1 million euros). Japan, however, escaped the trend, with an increase of 3.9% at constant exchange rates (-5.4% at current exchange rates) to 60.9 million euros.
Weighed down by a 28% decline in the wholesale channel, the EMEA zone also posted a double-digit fall, down 11.5% at constant and current exchange rates to 184.5 million euros.
North America (-6.4% at constant exchange rates and -6.1% at current exchange rates to 207.7 million euros) and Central and South America (-3.3% at constant exchange rates and -7.3% at current exchange rates to 54.5 million euros) proved slightly more resilient.
Continued efforts
In terms of sales channels, wholesaling was much more penalized ( -22.1% at constant exchange rates and -21.0% at current exchange rates to 171.6 million euros) than direct retailing (-5.6% at constant exchange rates and -7.9% at current exchange rates to 552.2 million euros).
Despite these setbacks, Ferragamo is not giving up.
“The work of enriching the product offering continues, as do marketing and retail actions aimed at maximizing the brand’s potential and acquiring new customers, pursuing our own narrative and improving the experience both in-store and online, while maintaining strict operational discipline.” details the Maison.
It points out that such efforts have already produced, in the last quarter, “ encouraging results in terms of sales in the main distribution channel in Europe, Japan and Latin America, in all the main product categories of the renewed continuation offer, and in particular in women’s handbags and shoes, also stimulated by some new icons.”
The company co-opted Ernesto Greco as a member of the Board of Directors and decided to convene the Ordinary and Extraordinary General Meeting of Shareholders for November 26.
The stock market did not punish the company’s latest performance. On Tuesday, the day of publication, Ferragamo shares closed up 0.7% at 6.48 euros. But over five days, it still fell by 2.3%, due to a 3.6% drop on October 14.
The following day, October 15, LVMH itself reported quarterly sales down 3% on a like-for-like basis to just over 19 billion euros, weighed down in particular by the Chinese market and its wines and spirits as well as watches and jewelry divisions.
Discover our plans Subscribe for 1€ Become an active member of the community of luxury leaders.
To continue reading this article, subscribe or log in to your account
Read also > LVMH declines in third quarter 2024
Featured Photo: © Ferragamo
