MILAN — Salvatore Ferragamo Group closed the year of its public listing with flying colors, reporting a 69.8 percent increase in net profit.
Boosted by worldwide growth, the bottom line at the Florence-based fashion house reached 103.3 million euros, or $143.6 million at average exchange, in the 12 months ended Dec. 31. This figure included minority interest profit of 22 million euros, or $30.5 million.
Revenues rose 26.2 percent to 986.4 million euros, or $1.37 billion, compared with the previous year.
During a conference call with analysts, chief executive officer Michele Norsa trumpeted Ferragamo’s heritage in helping to drive business and China’s role as a “major engine of growth, not only locally but everywhere in the world.”
Except for Japan, revenues by geographical area rose globally close to or higher than 30 percent.
Asia-Pacific was confirmed as the group’s main market, with sales of 357.7 million euros, or $497.2 million, up 33.5 percent compared with the previous year, and accounting for 36.3 percent of total revenues. China’s retail channel recorded 44 percent growth.
Despite the lackluster economy in Europe, the region posted a 30.8 percent gain. Norsa said the growth derived not only from tourists from emerging markets, but also “from a very strong operational improvement. We worked very hard on this area.”
North America showed a 27.2 percent rise, accounting for 22.4 percent of sales.
The Japanese market, despite last year’s earthquake and nuclear disaster, posted a 0.8 percent rise in revenues, helped by a favorable exchange rate. Sales in Central and South America grew 34.6 percent.
In terms of product, footwear sales rose 32.6 percent, followed by handbags and leather accessories up 26.8 percent, accounting for around 74 percent of total sales.
As of Dec. 31, Ferragamo had 323 directly operated stores. Retail sales grew 21.2 percent to 658.3 million euros, or $915 million. The wholesale and travel retail channel climbed 40.4 percent to 313.1 million euros, or $435.2 million. “Travel retail is on a solid growth trend and expansion,” said Norsa.
Although affected by costs associated with the listing, which totaled about 5 million euros, or $6.9 million, and a 32 percent increase in investments in communication, operating costs only grew 17.5 percent to 476.8 million euros, or $662.7 million.
As of Dec. 31, net debt stood at 29.4 million euros, or $40.8 million, compared with 18.2 million euros, or $25.3 million, at the end of December 2010, due to inclusion in the accounting of a financial debt of 44.2 million euros, or $61.4 million. This takes into account Ferragamo’s acquisition of shares in Imaginex Group, controlled by Hong Kong businessman Peter Woo — a financial debt of 39.9 million euros, or $55.8 million, although it will not be effective before 2013.
In 2011, the company invested 42.3 million euros, or $58.8 million, up 94.8 percent compared with the previous year, mainly aimed at expanding and refurbishing stores in key locations, in addition to projects such as e-commerce.
Of note were 10 openings in Mainland China, where the group is now present in 34 cities with 60 doors. The group also opened stores in other emerging markets such as Australia, Taiwan, Kuwait, Peru and Colombia. Ferragamo doubled the size of its Milan men’s unit in Via Montenapoleone, and expanded its banners in Brussels and Prague, and, in the U.S., in Atlanta and Las Vegas. Norsa said that a boutique in New York, two in London and one in Munich are being refurbished. “During our road show, we promised investors we would renovate and enlarge stores and this is a fundamental project for 2012, too,” said Norsa.
The group has also continued its expansion into the digital world with the launch of e-commerce stores in Korea, Turkey, Ukraine, Mexico and Canada, in addition to the 28 European countries and the U.S. already served by the platform since the end of 2009.
The company said, “The revenue figures recorded in the first part of the current year justify expectations for significant growth also throughout 2012, in the absence of severely unfavorable market conditions.”
Ferragamo shares closed down 1.62 percent at 15.20 euros, or $19.84, on Thursday.
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