Salvatore Ferragamo Reports First Half Sales Decline

Sales Decline Driven by Decreases in North America and Asia, Reflecting Broader Luxury Label Trend

Italian luxury brand Salvatore Ferragamo has revealed a 7.2 percent drop in sales at constant currencies for the first half of the year. The decline was driven by significant decreases in both North America and the Asia Pacific region, reflecting a broader trend among luxury labels facing weakened demand, particularly in the United States.

During this period, revenues reached €600 million ($657 million), aligning with analysts’ expectations according to a Reuters consensus. Operating profit also saw a steep decline, roughly halving compared to the same period last year, amounting to €47 million. This decrease can be attributed to the brand’s increased investments, primarily in communication strategies, as part of its ongoing efforts to revitalize the brand.

As we move further into the year, the higher share of new products, the continued marketing investments, together with compelling store and online execution, will strengthen the brand image and create engagement with existing and new audiences.

Marco Gobbetti, CEO Ferragamo

Gobbetti also revealed plans for a new store concept to debut at Ferragamo’s women’s boutique in Via Montenapoleone, Milan in the first quarter of 2024. The brand has been working on store enhancements, introducing a new logo and the degrade red color as part of its refreshment strategy.

Highlighting the role of creative director Maximilian Davis, Gobbetti noted that around 10 percent of the fall collection is already available in stores, and the reception from both new and existing customers has been encouraging.

Ferragamo FW 23 Show – Maximilian Davis

Despite the challenges, Ferragamo remains confident in its medium-term ambitions. Retail sales in the first half of 2023 declined by 5.9 percent to 415.1 million euros, mainly due to a weakening American market and strategic store closures. However, the performances in the Europe, Middle East, Africa region, and Greater China were positive.

Notably, North America experienced a notable decline of 18.6 percent in sales during the January-June period, indicating concerns about luxury demand in the region. The Asia-Pacific region also witnessed a 10.4 percent sales drop, despite China’s positive performance being offset by weakness in South Korea and the travel retail sector.

In line with the company’s strategic plan, Ferragamo has been closing nonstrategic and underperforming stores, with 35 closures anticipated by the end of 2023.

Sales by category displayed mixed performance. Footwear sales decreased by 4.6 percent to 266.8 million euros, leather goods saw a 13.6 percent decline to 234.7 million euros, apparel sales dropped 3.1 percent to 38.8 million euros, and fragrances decreased by 5 percent to 1.8 million euros.

Analysts at UBS cautioned that the turnaround efforts initiated by CEO Gobbetti and Creative Director Maximilian Davis might take until at least the end of 2023 to yield substantial results. Gobbetti, who was previously at the helm of Burberry, joined Ferragamo in early 2022.

Additionally, the company’s Chief Financial Officer, Alessandro Corsi, has resigned and will exit the Florence-based company on September 30.