Revenues at Ferragamo down 17% in Q1, hit by China

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The prestigious Italian luxury goods company Salvatore Ferragamo saw a 16.6% drop in first-quarter revenues at constant exchange rates, with the Chinese market being especially hard hit and sales generally slowing down across all countries and channels.

Ferragamo CEO Marco Gobbetti said the company’s poor performance in the quarter was due to the continued instability of the Chinese market and the company’s long-term struggles in the wholesale and travel retail sectors. Reflecting the intricate dynamics at work in the luxury business, the unflattering comparison only made matters worse.

The LSEG average estimate for the first quarter was 237 million euros, but actual sales of 227 million euros ($244.5 million) were below the mark.

In spite of this, Gobbetti was cautiously optimistic, stating that the direct-to-consumer channel saw a little improvement in April and that sales were largely consistent from February to April. Stakeholders should not worry that the gross margin will continue to decline, though, because he stressed the company’s dedication to focusing on top-line performance.

Gobbetti acknowledged weak demand in China and said that consumers were worried about the state of the economy as a whole. This attitude was borne out by the generally downward trend in Greater China sales data for March and April.

Despite the larger difficulties confronting the luxury sector, Gobbetti did find some good news: direct-to-consumer sales in Europe have been on an upward trend.

In spite of the challenges it faces, Salvatore Ferragamo is committed to staying ahead of the curve by learning from past mistakes and capitalizing on its rich tradition of handiwork and invention to fuel long-term success.

Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

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