On August 1, 2024, Italian fashion house Salvatore Ferragamo announced its financial results for the first half of 2024.
The company’s net profit for the first half plummeted to €6 million, compared to €21 million in the same period last year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) fell by 12.7% year-over-year to €117 million, representing 22.4% of total revenue. Operating profit (EBIT) stood at €28 million, a 41% decrease from the previous year.
In the second quarter, sales in the Asia-Pacific region saw a sharp decline of 14.9% compared to last year. In contrast, the Japanese market experienced a 9.8% increase in sales at constant exchange rates, thanks to a rise in tourist numbers, although current exchange rates resulted in a 1.7% decrease. Additionally, the weakness in the wholesale channel caused the overall decline in revenue.
Amidst these challenges, the new collections of shoes and handbags have been well received, particularly among younger customers, indicating positive trends in several markets.
Highlights of Ferragamo’s H1 2024 Performance are as follows.
Second Quarter Performance
- Revenue: €296 million (-8.1% year-over-year, -6.0% at constant exchange rates)
- Direct-to-Consumer Channel: €212 million (-5.5% year-over-year, -3.8% at constant exchange rates)
- Wholesale Channel: €78 million (-8.7% year-over-year, -12.1% at constant exchange rates)
First Half Performance
- Revenue: €523 million (-12.8% year-over-year, -10.9% at constant exchange rates)
- Direct-to-Consumer Channel: €382 million (-8.1% year-over-year, -5.5% at constant exchange rates)
- Wholesale Channel: €128 million (-23.1% year-over-year, -24.8% at constant exchange rates)
- Gross Margin: Stable at 72.1% of revenue
- Operating Profit (EBIT): €28 million (-41.0% year-over-year)
- EBITDA: €117 million (-12.3% year-over-year)
- Net Profit: €6 million (-73.2% year-over-year)
Sales by Region
- EMEA: Q2 sales down 2.9% year-over-year (-2.7% at constant exchange rates)
- North America: Q2 sales down 1.4% year-over-year (-3.2% at constant exchange rates)
- Central and South America: Q2 sales down 5.4% year-over-year (-6.1% at constant exchange rates)
- Asia-Pacific: Q2 sales down 14.9% year-over-year (same at constant exchange rates)
- Japan: Q2 sales down 1.7% year-over-year (+9.8% at constant exchange rates)
Sales by Product Category
- Footwear: H1 sales at €238.8 million (-10.5% year-over-year)
- Leather Goods: H1 sales at €203.5 million (-13.3% year-over-year)
- Apparel: H1 sales at €30.3 million (-21.9% year-over-year)
- Silk and Other Products: H1 sales at €37.2 million (-10.2% year-over-year)
In light of these results, Ferragamo’s CEO, Marco Gobbetti, commented, “The second quarter showed again some of the encouraging underlying operating trends that we started to see earlier in the year. Retail primary full-price sales showed a positive trend in the US, Europe, Japan and Latin America; our refreshed shoes and handbags offerings have been attracting new, younger customers, contributing to shift a higher proportion of purchases to younger demographics. In the media, the increased brand desirability was confirmed once again by the excellent resonance of our Fall-Winter 2024 Collection.”
Despite these positive trends, overall financial performance in Q2 was significantly impacted by the challenging consumer environment, particularly in the Asia-Pacific region, which offset positive trends in the other areas. The company also continued to face weakness in the wholesale channel due to a more selective distribution strategy.
Ferragamo emphasizes its focus on top-line performance and profitability amidst the ongoing slowdown in consumer demand. The company plans to expand its audience and boost engagement through refreshed product offerings, a full-funnel marketing approach, tailored CRM initiatives, and new store concepts.