Greater China, North America Boost Salvatore Ferragamo Revenues in First Half

MILAN — Business is picking up at Salvatore Ferragamo, boosted by Greater China and North America.

The Florence-based company on Tuesday reported preliminary revenues of 524 million euros in the first six months of this year, up 44.1 percent, compared with 363 million euros in the same period of 2020 — when the company, like its peers, was hit by the consequences of the COVID-19 pandemic. In the second quarter of 2021, sales soared 91.3 percent compared with the same period last year.

The figures exclude the company’s fragrance business, which will be licensed to Inter Parfums Inc. effective from October, and it is reclassified discontinued operations.

As reported, the license will last for an initial term of 10 years and marks a turning point for Ferragamo’s beauty business as its fragrance division had been managed in-house for the last two decades. To ensure the continuity of the Made in Italy production and the highest level of synergies with the fashion house, Inter Parfums will operate through a wholly owned company based in Florence.

While no conference call with analysts was held on Tuesday, as is customary for Ferragamo when reporting preliminary revenues, the company stated that the month of July continues to show a solid growth in revenues in directly operated stores in the U.S., Greater China, South Korea and Latin America, both compared with 2020 and the same period in 2019. At the second week of July, the worldwide retail performance is in line with pre-COVID-19 levels.

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The next call with analysts will be held after Ferragamo’s board meeting on Sept. 7, when chief executive officer Micaela le Divelec Lemmi will resign, as reported. From that date, all executive powers will be exercised by vice chairman Michele Norsa. Marco Gobbetti, who will remain CEO of Burberry until the end of the year, will then succeed le Divelec Lemmi as general manager and CEO. 

In the first half, the increase in revenues was achieved despite the ongoing lockdowns in some countries and bans and restrictions on international traffic, caused by the COVID-19 pandemic. As of June 30, the group was operating with 53 percent of retail stores at full capacity.

As of the end of June, the group’s retail network is comprised of 639 points of sale, of which 398 are directly operated stores.

In the first half, retail sales grew 46.3 percent to 381.3 million euros, representing 72.8 percent of the total.

In the second quarter, retail revenues were up 81.3 percent, with China, North America, Latin America and South Korea exceeding pre-COVID-19 levels.

The direct e-commerce channel continues to consolidate a solid growth with revenues up 70.6 percent.

The wholesale channel was up 41.1 percent to 138.1 million euros, accounting for 26.4 percent of the total.

Sales in the Asia Pacific region increased 35.2 percent to 222.3 million euros, accounting for 42.4 percent of the total.

In the first half, the retail channel in Greater China posted a 45 percent revenue growth at constant exchange rates. In particular, the retail channel in China and South Korea posted a 47.4 percent and 22 percent increase in sales, respectively, at constant exchange rates.

Revenues in Japan grew 13.4 percent to 41 million euros, showing a 55 percent gain in the second quarter.

Overall the Asian continent represents more than 50 percent of total revenues.

The Europe, Middle East and Africa region, still penalized by the lockdowns of stores and mainly by the limited flows of tourists, reported a 22.3 percent increase in revenues to 96 million euros, representing 18.3 percent of the total.

Sales in North America climbed 103 percent to 137 million euros, accounting for 26.1 percent of the total. In the second quarter, revenues in that region more than quintupled compared with the second quarter last year.

Revenues in Central and South America in the first half rose 64.8 percent to 27.4 million euros.

By category, sales of shoes rose 40 percent to 223.2 million euros, representing 42.6 percent of total revenues.

Leather goods and handbags were up 48.5 percent to 235.4 million euros, accounting for 45 percent of sales.

Ready-to-wear rose 53 percent to 29.2 million euros, or 5.6 percent of the total.

Creative director Paul Andrew exited the company in May and no successor has been named so far, as the in-house team is now in charge of the collections.

Ferragamo said it has renewed its licensing agreement with Vertime B.V. for the production and distribution of watches for a 10-year period, starting from Jan. 1, 2023.

The company has signed a sustainability linked loan with UniCredit for a maximum total amount of 80 million euros. The credit facility is structured as a revolving credit line with a maturity in 2025 and has a rewarding mechanism linked to specific environmental and social sustainable indicators that will be verified annually. Last year, the company signed a financing credit line granted by Intesa Sanpaolo SpA for a maximum amount of 250 million euros that was also linked to the luxury brand hitting certain sustainability targets.

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