Asia Pacific Lifts Salvatore Ferragamo’s Retail Business but Sales Decline in 2020

MILAN — The Asia Pacific was confirmed as Salvatore Ferragamo SpA’s main market in 2020 and helped lift the luxury group’s retail performance, but could not offset a decline in sales, impacted by the global lockdowns and the travel restrictions due to the health emergency.

In the 12 months ended Dec. 31, preliminary revenues fell 33.5 percent to 916 million euros, compared with 1.37 billion euros in 2019. Sales improved in the last quarter, showing a smaller decrease of 20.4 percent.

The Asian continent represents more than 50 percent of Ferragamo’s total revenues.

Sales in the Asia Pacific area were down 25.5 percent to 381 million euros, accounting for 41.6 percent of the total. In the last quarter, sales dropped 11.2 percent at constant exchange, negatively impacted by the performance of the wholesale channel, especially in travel retail.

The retail channel in China in the last quarter was up 33.9 percent at constant exchange rates, bringing the full-year performance to a 11.3 percent gain at constant exchange rates.

Directly operated stores in South Korea also registered a gain in revenues in the full year, and in Taiwan they were up 12.9 percent in the last quarter at constant exchange rates.

In 2020, sales in Japan fell 24.5 percent to 89.4 million euros. In the last quarter, sales decreased 6.7 percent, benefiting from the positive performance of the retail channel, which was up 2.9 percent.

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Ferragamo reported a 42.5 percent drop in sales in the Europe, Middle East and Africa region, totaling 199.7 million euros and accounting for 21.8 percent of the total. In the last quarter, sales fell 34 percent. The area was still strongly impacted by the closure of stores and the lack of tourists as the restrictions continued to curb the spread of the COVID-19 pandemic.

North America recorded a 39.4 percent decrease in sales to 192.6 million euros, accounting for 21 percent of the total, while they were down 26.6 percent in the last quarter.

Revenues in Central and South America were down 35.6 percent to 53 million euros. In the last quarter, they decreased 10.7 percent with all markets excluding Mexico still highly affected by the closure of stores.

In the year, sales in the retail channel were down 29.2 percent to 637 million euros, accounting for 69.6 percent of the total. Like-for-like revenues fell 29.9 percent. In the last quarter, retail revenues declined 13.7 percent. Like-for-like sales were down 16.4 percent.

As of Dec. 31, the group had 644 points of sales, including 395 directly operated stores and 249 wholesale stores.

On the bright side, Ferragamo’s e-commerce channel registered strong growth, up 61.1 percent at constant exchange rates. The company has been increasingly investing in its digital platform and communication and its omnichannel service.

The wholesale channel reported a 41.7 percent decrease to 269.1 million euros, mainly hit by the performance of the travel retail channel and of the fragrance category, and representing 29.4 percent of the total. In the last quarter, wholesale revenues fell 33.8 percent.

By category, sales of shoes fell 34.9 percent to 374.7 million euros, accounting for 41 percent of the total.

Leather goods and handbags were down 28.1 percent to 388.6 million euros accounting for 42.4 percent of the total.

Ready-to-wear decreased 32.4 percent to 50.2 million euros. Fragrances were down 52.4 percent to 41.8 million euros.

Rumors about the future of the company increased over the past few days, as Ferragamo Finanziaria SpA, which controls Salvatore Ferragamo, revealed last week it was cutting back the number of family members on the board of Salvatore Ferragamo and increasing the number of independent directors, giving a mandate to an executive search firm to complete the process.

A more independent board, appointed by professionals, leads to additional speculation about a possible sale of the company, although the Ferragamos have repeatedly denied that.

Banker and businessman Claudio Costamagna has become a member of the board and he has a successful track record in merger and acquisition operations.

As reported, speculation is swirling over whether three key figures will continue to lead the company: Executive chairman Michele Norsa, who joined the Salvatore Ferragamo company in May 2020; chief executive officer Micaela Le Divelec Lemmi, and creative director Paul Andrew, whose contract is said to expire at the end of February.

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