Asia-Pacific struggles and underperforming wholesale channel contribute to steep declines
Key Takeaways:
- Salvatore Ferragamo Group reported a 9.6% revenue drop in Q3 2024, primarily driven by weakening consumer confidence in the Asia-Pacific region and poor wholesale performance.
- Revenues for the first three quarters of 2024 declined by 11.9%, totaling €744 million.
- CEO Marco Gobbetti acknowledged the ongoing challenges and noted that these trends are expected to continue through the remainder of the year.
- The wholesale channel saw a significant 21% decline, and footwear, leather goods, and apparel segments also experienced notable downturns.
- Gobbetti emphasized that long-term brand growth would take time, particularly in relation to the new creative direction under Maximilian Davis.
Salvatore Ferragamo Group reported a decline in revenues for Q3 2024, citing decreased consumer confidence in the Asia-Pacific region and challenges in the wholesale channel as major contributors. The group saw a 9.6% revenue drop for the quarter, bringing total revenues to €221 million. Over the first three quarters of the year, sales fell by 11.9%, resulting in €744 million in revenue.
Salvatore Ferragamo’s CEO and General Manager, Marco Gobbetti, addressed the disappointing figures, stating, “The results of the third quarter have been impacted by the challenging macroeconomic and consumer environment and we expect this trend to continue in the last part of the year.” He pointed to reduced traffic in secondary channels, which placed additional pressure on wholesale performance.
Direct-to-consumer sales declined by 7.9%, totaling €552.2 million from January to September. The company currently operates 369 stores worldwide, down from 377 in September 2023, although new store openings were recorded in Tokyo, Beijing, Seoul, and Suzhou.
The wholesale channel performed worse, posting a 21% decrease in revenue, which dropped to €171.6 million. This reflected weaker-than-expected demand in the U.S. market during Q3. Gobbetti warned of minimal improvements in the channel’s performance as the company heads into Q4.
By category, Ferragamo’s key segments—footwear, leather goods, and apparel—saw declines of 11.3%, 10%, and 20.5%, respectively. Responding to an analyst’s inquiry about the gap between the positive reception of creative director Maximilian Davis’s collections and the company’s sales performance, Gobbetti acknowledged, “it takes time to grow and resonate with a wider public, [the improvement] can’t [come] overnight.”
Regional sales showed similar downward trends. Revenues in Europe, the Middle East, and Africa declined by 11.5% to €184.5 million. North American sales dropped 6.1% to €207.7 million, while Central and South American revenues fell by 7.3% to €54.5 million. In the Asia-Pacific region, sales decreased by 18.1% to €216.1 million, although Japan posted slight growth at constant exchange rates. Gobbetti noted that Chinese consumer shopping trends remain below pre-pandemic levels and have shifted more towards Japan.
Despite the disappointing figures, Gobbetti laid out plans to enhance brand engagement, strengthen the brand narrative, and optimize both in-store and online experiences. He indicated that the full-year operating results are expected to be at the lower end of analyst estimates, around €30 million, with Q4 trends continuing the same challenges seen earlier in the year.