Maximilian Davis - Designer, Creative Director of Ferragamo

[tatouejeremie]

Ferragamo’s Sales Decline in First Half

Sales at Italian luxury goods group Salvatore Ferragamo declined by 7.2 percent.
By Reuters

03 August 2023

Sales at Italian luxury goods group Salvatore Ferragamo declined by 7.2 percent at constant currencies in the first half, hit by double-digit drops in both North America and Asia Pacific, the company said on Thursday.

Revenues totalled €600 million ($657 million) in the period, broadly in line with an analyst consensus gathered by Reuters.

Operating profit roughly halved compared with the first six months of last year, to €47 million, as Ferragamo stepped up investments, mainly in communication, as part of efforts to turn around the brand.

“As we move further into the year, the higher share of new products, the continued marketing investments, together with compelling store and on‐line execution, will strengthen the brand image and create engagement with existing and new audience,” chief executive Marco Gobbetti said in a statement.


He added that the choices made and work done reinforce the confidence in the group’s medium‐term ambitions.

Sales in North America, where concerns have risen in recent months about a slowdown in luxury demand, fell by 18.6 percent in the January-June period, with the wholesale channel also hit by the rationalisation of the distribution network.

Sales in the Asia-Pacific region were down 10.4 percent despite a positive performance in China, which was offset by a further weakness in South Korea and in the travel retail channel.

Last month UBS analysts warned that with CEO Gobbetti having joined Ferragamo only at the start of 2022 and Creative Director Maximilian Davis a little later, it could take until at least the end of 2023 before turnaround efforts start to bear fruit. Gobbetti was previously in charge at Burberry.

By Elisa Anzolin; Editors Valentina Za and Keith Weir

businessoffashion.com

 

[Benn98]

Ferragamo sales fall 7.2% on Asia, North American declines

CEO Marco Gobbetti said the brand is in the process of putting Maximilian Davis’s collections into stores and clearing up distribution networks.

August 3, 2023

Ferragamo’s revenue dropped 7.2 per cent year-on-year to €600 million in the first half of 2023, ended 30 June 2023, the company said Thursday, caused by slow recovery in travel retail and double-digit sales declines in North America and Asia Pacific.

Net sales in APAC were down 10.4 per cent in the first half, weakened by slower travel retail recovery and performance in Korea and Southeast Asia. Sales in China were up, the brand said, but it doesn’t break out the country’s performance. While other luxury brands reported strong performances in China — enough to offset declines elsewhere — CEO Marco Gobbetti noted a slight market-wide dip in performance in China in the past few weeks. In North America, the company saw an 18.6 per cent decline in net sales due to challenges caused by its planned changes to its distribution channel strategy, in line with performance trends across luxury. Sales in Latin America were down 7.3 per cent. In EMEA, sales increased 10.9 per cent.

“In the EU, we haven’t seen a major change, we’ve seen a normalisation. In terms of other nationalities, they’re very much reflecting the state of the markets. For Chinese [consumers] spending domestically, they’ve not significantly started to travel, while Americans have been continuing to travel to Europe, so we see a good portion of their spend happening abroad,” Gobbetti said.

Gross profit increased to 72.2 per cent of revenues as the company has been focusing on its quality of sales, channel optimisation, and new product assortment. But ramped-up marketing spend ate at net profits, which fell 65.4 per cent to €21 million.

Gobbetti joined in January 2022 from Burberry, appointing Fashion East graduate Maximilian Davis to lead as creative director in March 2022. Gobbetti told analysts that Davis’s collections so far have been received well throughout the first half of this year, but just 10 per cent of the collections are made up of Davis’s new designs, meaning the full effect of his creative leadership won’t be seen until the end of the year.


“We are pleased by the early results of the products designed by our creative director, Maximilian Davis. These new products still represent a very small portion of the total offer and are yet to contribute meaningfully to the overall sales performance, which reflects, at this stage, the acceleration of the transition from the previous creative course, as well as our ongoing focus on quality of sales and distribution,” said Gobbetti.

In the meantime, Ferragamo has been clearing up its retail and wholesale networks to optimise the distribution strategy and make space for new products. Net sales from retail channels decreased by 4.5 per cent due to weakened consumer demand in the US in addition to around 13 planned store closures, while performance in EMEA and China were positive. Meanwhile, net sales from wholesale channels dipped 14.3 per cent due to its planned wholesale network optimisation in the US and due to slow progress in the recovery of travel retail.

“This is an optimisation that we’re doing; it’s not a restructuring of the network,” Gobbetti told analysts. “We’re gradually closing stores that we feel are not strategic in terms of the customers, the locations, the contribution they gave to the margins of the company. We don’t expect there will be more closures going forward, but overall I think between 35 and 40 stores was the optimisation we envisioned.”

Gobbetti added that Q3 is likely to be similar to Q2 and that he expects the revenues to stabilise toward the end of this year once a higher share of new products has been introduced. Despite the performance, Gobbetti is confident that investors will start to see the positive effect of his transition strategy in 2024. “It’s not only a creative transition, it’s also a focus on the quality of sales that we’re implementing, and this focus on quality is not just in terms of optimisation of the network and reduction of markdowns, it’s about policies, it’s about quality of product that we’re transitioning to,” says Gobbetti.

Vogue Business

 

[LadyJunon]

Not a good sign...

 

[reese06]

Yikes.

From what I have seen in store, I don't think the products and marketing are strong enough for a huge growth.

 

[yslforever]

Not a good sign...

Yikes.

From what I have seen in store, I don't think the products and marketing are strong enough for a huge growth.

The products don't match the price tag at all, they aren't hot enough to justify Celine or BV prices. And yes the in-store marketing is lame: the trendy sneakers are right next to the grandpa ties....

 

[Kennnnn]

I think Ferragamo should just focus on being a solidly bourgeois brand, with the printed scarves, simple outerwear, varina bows everywhere.

It doesn't have to be fashion forward (like Bottega and Gucci); it already has an edge over the other Italian leatherware brands (Tod's, Trussardi) in having a much more feminine allure; and it's better known and more widely available than say Etro or MaxMara.

 

[disco54]

The store near my place is almost empty , I am surprised its not a 20% decline, I knew this was bound to happen , their new creative director is not good.

 

[Olaffo]

"Ferragamo’s Sales Decline in First Half" as if anyone is suprised.

Grow up people: Gobetti is tired old one trick pony and when you match that up with another self confident twink as creative director then disaster is almost guaranteed. In London nobody cares about SF and even Max Mara which is literally next door is much more occupied. I'm giving it 3-4 more seasons on a good day and they will start looking for someone else. Maybe Riccardo Tisci? He is still unemployed isn't he?

 

[lhhbl]

but from what I understood from the article they’re not blaming Maximiliam at all and even said that his products are not yet widely available and will still do it in the next releases to come. only then they’ll be able to see if the new direction is paying off or not (which I dont think it will. his designs feel heavy-handed)

 

[Kimihiro]

Someone who knows analytics and stuff tell me if even with the whole social media hype about his appointment some collateral hype should have turned to sales? Or maybe Ferragamo just doesn’t know their clientele.

It’s not like it was upsetting as Hedi’s Celine debut that for a while sales at Celine were not picking up until it magically just did.

 

[avonlea002]

Just hire Frida Giannini. She will be prefect for this with her department store sensibility.

 

[LadyJunon]

It’s not like it was upsetting as Hedi’s Celine debut that for a while sales at Celine were not picking up until it magically just did.

To this day, I still don't understand how it happened how Hedi's Celine picked up so strongly. It's like something happened during the pandemic and it was an immediate success out of nowhere.

This is probably best discussed on his own thread though.

 

[Frederic01]

Salvatore Ferragamo Posts Lower Sales​

By Andrea Figueras
Oct. 19, 2023 1:03 pm ET

Salvatore Ferragamo reported a decline in sales for the first nine months of the year, but has maintained its mid-term targets.

The Italian luxury-goods maker posted on Thursday revenue of 844 million euros ($889.4 million) for the first nine months of 2023, down 8.3% at current exchange rates, compared with EUR920.7 million in the year-earlier period.

The company’s performance was hurt in both retail and wholesale channels, it said.
Both North America and Asia Pacific posted a declines of 20% and 16%, respectively. Europe was the only market in which the company reported growth of 3.1%.
“The overall sales performance reflects, at this stage, the ongoing focus on quality of sales and rationalization of distribution networks, as well as the evolution of the offer and the acceleration of the transition to the new creative course—the full potential of which will become evident in 2024,” Chief Executive Officer and General Manager Marco Gobbetti said.
The company confirmed its mid-term targets, despite what it called an increasingly uncertain market environment.

WSJ

 

[Nimsay]

nobody asks for Ferragamo when they think Italian Fashion.

 

[disco54]

Ferragamo is turning into Gianfranco Ferre. Their merch is overpriced and the store where I live is literally always empty.

 

[PierreGotha]

The bags look good on photos but once you see them in store, it looks too sterile and singular.
Once you try them on, they will end up wearing you instead of you wearing them.

 

[yslforever]

The bags look good on photos but once you see them in store, it looks too sterile and singular.
Once you try them on, they will end up wearing you instead of you wearing them.

They don't even look good on the runway, imho they make you look matronly.
And Ferragamo price increase was absurd, revenge-spending is over, people care about their disposable income now.

 

[jeanclaude]

They should focus on shoes (their key product) and other accessories, and get rid of the RTW line...and if in the future they manage to relaunch the brand (with the help of another designer), then they could relaunch RTW.

 

[Lola701]

I think the pricing strategy is also at play here.
I very much respect the fact that Gobbetti stands behind the creative force, as he should but something needs to be said to all those brands that thinks that the market is linear.
Chanel, Vuitton, Dior, Gucci, Hermes and Prada that are giants in the luxury world can afford price increases. Why? Because on top of their heavy marketing, those brands are status symbols…

You have other brands smaller in sizes that can also afford to be super expensive because their success was build on a niche.

Ferragamo indeed has never been that type of house. Much like Burberry.
Very bourgeois indeed but still accessible and approachable.
I think that all those brands should base their pricing around YSL’s pricing.

Because the fashionable look of Davis can definitely be appealing and increase sales, only if the pricing is intelligent. Even more considering that Ferragamo doesn’t offer that ego/status symbol thing.

Those suits needs to understand that everybody cannot be Hermes or Vuitton!

 

[Thefrenchy]

Putting a brand whose core DNA is not RTW in the hands of a young talent is the original mistake.

In a configuration like this, you need to give it to a household name who is gonna drive people to you based on their name and recognition only. That way, you can start building a RTW signature, benefiting from their proven (i.e. that prove to sell) skills and own signature. Giving it to a Phoebe-type could have been an interesting move.

Overall, I think there needs to be an industry shift and CEOs / investors need to stop wanting to make their brand the "(insert regional adjective) Hermes" and wanting to be the next hip thing. First because it never works (Bottega's goal to be the Italian Hermes ends up with RTW moving even less than before from what I heard leading to them revising their pricing strategy for the next seasons, Burberry's insane prices are already biting them in the a** etc), and I'm sure there is room to make profit off being true to your core identity and selling reliable products you are known for.

Perhaps they should just give up RTW to focus on accessories and have a crazy strong PR strategy to turn their shoes and accessories into IT pieces.

I wish him the best though.