Salvatore Ferragamo to accelerate growth
Italian luxury group Salvatore Ferragamo said on Friday it aims to raise its revenues by twice the market rate from 2017-2020, backed by a drive to improve performance at existing stores and updates to its product ranges, it said on Friday.
The Florence-based group is presenting its industrial strategy under new Chief Executive Eraldo Poletto, who took over in Augut to replace long-serving Michele Norsa. Poletto said he aimed to “deliver a refreshed, more contemporary brand aesthetic” with the company’s three newly-appointed designers.
“The brand is there, we need to wake it up a bit, and make it louder,” he said in his first strategy update as CEO. Poletto did not refer to a specific market growth rate, saying that was “a moving target”. Consultants Bain & Company expect the luxury industry to grow by 1-2 percent in 2017, and a further 3-4 percent in the years up to 2020.
High-end brands have been struggling with a slowdown in their biggest market, China, as well as a drop in tourist spending in Europe following a series of deadly attacks.
Florence-based Ferragamo almost doubled revenue in the six years to 2015 and its net profit rose threefold. But last year sales rose just 1 percent and were down 2 percent at constant currencies.
Ferragamo would not raise prices, but aimed to make its stores more profitable, raising sales per square meter at its 683 boutiques worldwide, Poletto said.
One analyst, who declined to be named, said the revenue target was ambitious and above the market consensus forecast, while the drive to improve store efficiency was “positive”.
Finance chief Ernesto Greco, set to leave the company in mid-March, said that unlike the past, opening new stores would not be a strong driver of growth, adding Ferragamo did not plan a large number of store closures either.
The company, whose founder designed ballet shoes for actress Audrey Hepburn, is seeking to make its brand more contemporary and desirable and has focused in recent months on increasing profit margins rather than pushing sales, given the uncertain prospects of the luxury industry.
On Tuesday it said its preliminary revenue last year was 1.438 billion euros ($1.54 billion), up 1 percent at current exchange rates and slightly above market expectations.