This story first appeared in the November 14, 2012 issue of WWD. Subscribe Today.
MILAN — Boosted by growth in all geographic markets and gains in the footwear and leather goods categories, Salvatore Ferragamo SpA registered an 8.1 percent increase in net profits to 84.7 million euros, or $108.4 million, in the first nine months of the year. This includes a minority interest profit of 15 million euros, or $19.2 million.
In the period ended Sept. 30, revenues climbed 18.7 percent to 832.6 million euros, or $1.06 billion, compared with 701.3 million euros, or $981.8 million, in the same period last year.
Dollar amounts have been converted at average exchange rates for the periods to which they refer.
“Consumer behavior has been changing in recent weeks, but the luxury industry is very resilient,” said chief executive officer Michele Norsa in a conference call with analysts. “We are well-positioned to capture consumer trends.”
The Asia-Pacific area was the group’s top market, showing 19.5 percent growth and accounting for 35.6 percent of total sales. Retail growth in Mainland China increased more than 30 percent, but Norsa conceded “China has been inconsistent in recent weeks,” with a “relatively slow” third quarter, which showed a 6.1 percent gain.
Japan was up 9.2 percent and revenues in Central and South America climbed 29.4 percent. Norsa said Latin America and Australia are becoming “more and more important” markets, where local consumption is growing, as well as tourist flows.
Sales in Europe grew 22.6 percent, “far beyond expectations,” said Norsa. The U.S. was up 16.8 percent and the executive described the mood there as “positive.” He said the company still did not have data regarding the impact of Hurricane Sandy, which forced stores to close for two or three days, but “did not damage the units, infrastructure or logistics.”
Retail sales in the nine months grew 15.3 percent to 532.5 million euros, or $681.6 million, while the wholesale and travel retail channel showed a 25.7 percent increase, to 286.6 million euros, or $366.8 million.
By category, footwear sales gained 20.6 percent and handbags and leather accessories were up 19.6 percent, accounting together for about 75 percent of sales. Fragrances grew 23.6 percent, boosted by the successful launch of the new women’s fragrance Signorina.
Operating costs grew 18.8 percent, including a 40.3 percent increase in communication expenses such as sponsorship of the exhibition “Saint Anne – Leonardo Da Vinci’s Ultimate Masterpiece” and the resort collection fashion show at the Louvre Museum in Paris.
Capital expenditures rose 55.7 percent to 36.5 million euros, or $46.7 million, mainly driven by stores openings, the enlargement and refurbishment of existing ones, in addition to logistics enhancements and digital projects. Ten new locations, of which five will be in China and units in Atlanta and Las Vegas airports, are coming up next.