Ferragamo facing economic challenges

The Italian luxury shoe company Salvatore Ferragamo has seen its stock drop by 2.43%, reaching 11.63 euros on Piazza Affari (Milan Stock Exchange). This decline comes after the release of disappointing results for the first nine months of 2023.

By the end of September 2023, the Italian company reported a total revenue of 844 million euros, marking an 8.3% decrease compared to the same period the previous year when the figure stood at 920 million euros. This decline has been felt both in in-store and online sales, affecting nearly all geographic regions for the brand: -20.1% in North America, with the U.S. market, in particular, penalizing all luxury brands due to rampant inflation, -16.4% in the Asia-Pacific region, -3.1% in Central and South America, and -11.6% in Japan. Europe and the Middle East are the only regions showing slight growth, with an increase of 3.1%. The reduction in international travel has also impacted the duty-free channel.

Negative figures had already raised concerns during the first-half review of 2023 when Salvatore Ferragamo recorded a -4.8% drop in sales, amounting to approximately 600 million euros. However, in the first half of 2021, Ferragamo had experienced remarkable growth of 44.1%, bolstering investor confidence. The company had even outperformed expectations the following year in 2022, with results significantly above forecasts: 630 million euros for the period. However, since then, with the impact of the pandemic and international geopolitical issues, the company's financial situation has become more fragile. Like other luxury brands that are not backed by powerful groups, the brand is more vulnerable to uncertainties related to the economic climate. In May 2023, CEO Marco Gobbetti unveiled a new strategy for Ferragamo, aiming for "long-term revenue growth through the increasing participation of new and young consumers."

In 2020, a possible acquisition by LVMH had already been discussed. Although this idea seems to have been temporarily set aside, the Italian gem continues to attract interest from the luxury giant. Marco Gobbetti, who joined Ferragamo in 2022 after leaving Burberry, remains optimistic and expresses satisfaction with the products designed by Creative Director Maximilian Davis. "The full potential of the new creative launch will be evident in 2024," he stated. Nevertheless, the question remains: will LVMH continue to be interested in Ferragamo, or, given its partnership with Farfetch, will the Italian house turn to Richemont to ensure its stability? 2024 will be a decisive year for Ferragamo.