Ferragamo's Sales Fell 4% In The First Quarter, But They Are Recovering In Some Regions

The epidemic has impacted the world for more than three years, and the development of global brands has been slow. Italian luxury goods company Ferragamo Group (FERRAGAMO) announced sales data for the first quarter of fiscal year 2023 on April 20. Due to the sluggish retail sales in the US market, the slow recovery of travel retail in the Asia-Pacific region, and the optimization of third-party sales channels, the group's sales in the first quarter fell by 4% year-on-year. But the overall situation has added confidence to this brand that is slowing down in its transformation.

The Ferragamo Group appointed Maximilian Davis, a 27-year-old African-American designer, as its new creative director last year. Maximilian Davis was born in a Trinidadian-Jamaican family in Manchester, England. He graduated from the London College of Fashion. He founded his eponymous brand in 2020 and was shortlisted for the semi-finals of the 2022 LVMH Young Designer Awards (top 20, then voluntarily withdraw from the competition).

And on September 21, 2022, the brand announced through its official social media account that it would officially change "Salvatore Ferragamo" into an all-caps FERRAGAMO and release a new brand logo. Such changes are not uncommon. For example, when Hedi Slimane was in charge of Saint Laurent, "Yves Saint Laurent" was changed to "Saint Laurent"; After John Galliano left Dior, the "Christian Dior" printed on the advertisement gradually became "DIOR". At present, the time is short, and we still cannot know the effect of the brand name or logo accurately.

In the first quarter ended March 31, Ferragamo Group's total sales were 278 million euros, a year-on-year decrease of 4%, and the exchange rate may fall even more. The sales performance of each region is as follows:

• Sales in the Asia-Pacific region fell by 13.6% year-on-year (-13% at constant exchange rates), mainly due to the lackluster performance of travel retail, but retail sales in China increased.

• Sales in Japan decreased by 7.1% year-on-year (+1.2% at constant exchange rates).

• EMEA (Middle East, Europe, and Africa) sales increased by 24.7% (up 25% at constant exchange rates) year-on-year. Sales grew in both wholesale and retail channels.

• In North America, first-quarter sales fell by 19.8% (-23.4% at constant exchange rates) compared to the same quarter last year. Due to the impact of the optimization of the distribution network, the sales performance of the wholesale channel was not satisfactory.

• Sales in Central and South America increased by 5.4% (-5.7% at constant exchange rates) compared to the same period last year.

The first merchandise collection, designed by new creative director Maximilian Davis, went on sale at the end of February. However, Group CEO Marco Gobbetti said that these new products "have not yet had a substantial impact on sales", so the sales performance in the first quarter does not reflect the market's response to Maximilian Davis' design.

Ferragamo Spring/Summer 2023 Show

Ferragamo Spring/Summer 2023 Show

At the beginning of 2022, the new CEO Marco Gobbetti joined Ferragamo from Burberry, promising to quickly reverse the situation, increase investment, transform stores, and attract young customers for Ferragamo so that the group's revenue will double to nearly 2.3 billion euros by 2026 compared with 2021 levels.

Regarding the performance in the first quarter of 2023, Marco Gobbetti said that in 2022, he will pursue sales quality, increase investment, and make excellent progress in marketing communication and is satisfied with the results. The Spring/Summer 2023 collection was launched in the company's stores in February this year. They were greatly encouraged by the initial performance of the collection and the success of the 2023 Fall/Winter fashion show.

While the macroeconomic environment remains volatile and complex, they are excited about Ferragamo's potential and will continue to invest in their growth objectives. He also stressed that they "still have confidence" in the current development plan and re-emphasized that the medium-term development goals previously set can be achieved.

The author believes that although overall sales have fallen, the consumption promotion in some regions, such as China, has given us hope for Ferragamo's revival. In fact, their overall products are minimalist and luxurious, full of a sense of quality. I believe that with the new CEO and young designers joining Ferragamo, it will definitely glow with new brilliance.