FLORENCE — Salvatore Ferragamo Italia SpA posted a double-digit jump in sales last year, but its executives were cautious about the future, concerned with the margin-eroding effects of a strong euro.
Ferragamo chief executive officer Michele Norsa said best-selling categories like accessories and men's wear allowed the company to post preliminary 2006 sales growth of about 11 percent to 640 million euros, or $806.4 million at average exchange rates for the period.
"Business in the U.S. is going extremely well," Norsa said, speaking on the sidelines of a press preview for Ferragamo's men's collection, which showed here Thursday night.
He said U.S. sales in the last quarter of the year spiked 25 percent, riding a boom in luxury sales during the holiday despite a generally lackluster period for retailers overall.
While several vendors at the men's wear trade show Pitti Immagine Uomo lamented that an exceptionally warm winter has bitten into men's apparel sales, Norsa said Ferragamo did well at Christmastime.
"Clothing sales softened for climatic reasons, but accessories did very well and the business is growing," Norsa said, reiterating the company could go public as early as next year.
Still, Norsa expressed concerns about the strengthening of the euro against the dollar and yen. Many companies exhibiting at Pitti Immagine Uomo also voiced currency-related concerns and are planning markups to compensate, at least in part.
In the U.S., Ferragamo will increase the prices of its fall collection by an average of 5 percent on the year to partially compensate for the weak dollar, said Hervé Martin, the company's product general manager.
Still, the Ferragamo executives said they think Japan poses a bigger problem, affecting other parts of Asia as well.
"I'm more worried about Japan because it's very insulated and it doesn't have the tourism," Norsa said.
Martin added, "Japan is much more complicated. A very weak yen can have many consequences on travel ... because Japanese people have lower buying power when they travel [abroad]."
Still, Norsa and Martin said they are upbeat about the current year, especially as Ferragamo explores new markets such as Mexico. Norsa said he just returned from Florida, where he was studying untapped potential there and in Latin America."I'm trying to understand how we can grow," he said, adding Ferragamo plans to open about 40 to 50 stores this year.
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