Salvatore Ferragamo’s sales down 3.4% in 2018

Sales for Italian luxury label Salvatore Ferragamo, which is beset by a brand positioning problem, fell by 3.4% at current exchange rates in 2018, after a troubled year in 2017.

In a press release issued on Tuesday, the group reported a revenue of €1.35 billion, slightly below expectations and equivalent to a 1.7% downturn at constant exchange rates. According to Factset Estimates, the consensus among analysts was for a revenue forecast of €1.36 billion.

In the fourth quarter alone, sales were down 3.6%, penalised by exchange rate effects, a weakened impact by end-of-season sales and a negative performance in multibrand retailers.

Asia-Pacific remained the group's main market, accounting for 37.5% of sales. The latter fell by 1% in the course of the year, as South-East Asia struggled while China was more buoyant. Salvatore Ferragamo underlined that, in the fourth quarter, its directly operated stores in China posted a 7.6% increase in sales.

However, annual sales fell by 6.1% in the EMEA region, by 5.4% in North America, by 2.3% in South and Central America and by 0.4% in Japan.

Footwear is still the Florentine label’s core business, accounting for 41.2% of sales. Shoe sales nevertheless fell by 5.9%, while apparel plunged, its sales down 14.9%, and accessories lost 8.6%. Small leather goods instead grew 1%, and perfumes by 5.6%.

Salvatore Ferragamo has been struggling in the last few years. In 2017, its net income decreased by 42.4%, and revenue was down 3.1%.

To steady its course, the label began a far-reaching reorganisation in 2016. It is trying to strengthen its position in the product categories where it is weaker, while consolidating its footwear business.

At the end of July 2018, the group hired a new General Manager, Micaela Le Divelec Lemmi, who worked for 20 years at French luxury giant Kering.

But progress is slow, and is made even more complicated by the current business environment, with weak growth in Europe, the China-USA commercial tensions and Brexit. In one year, Salvatore Ferragamo’s share price lost 26% on the Milan stock market.