MILAN — Ferragamo is “fully on track on all its strategic priorities,” as the company posted another year of growth in revenues.
This was achieved “amid a complex and volatile macroeconomic environment, in which we focused on the quality of sales in our retail network, progressed on the optimization of the wholesale channel, and increased investments in the second half, as planned,” said the company’s chief executive officer and general manager Marco Gobbetti during a conference call with analysts on Thursday evening.
Last year, the Florence-based company reported a 10.2 percent increase in sales to 1.25 billion euros, compared with 2021.
In the 12 months ended Dec. 31, net profit, including a minority interest, amounted to 65.3 million euros, a 19.5 percent decrease compared with 81.1 million euros in 2021.
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Operating profit decreased 10.8 percent to 128 million euros compared with 143 million euros in 2021.
The drop in profitability was caused by an increase in investments in retail, marketing and communication and by comparison with 2021, when the company benefited from “non-repeatable reimbursements and government grants,” Gobbetti said. “We see a solid, strong picture now.
“In May, we outlined a mid-term strategy built on four pillars — to renew the product, reenergize the brand, leapfrog digital and enhance the customer experience,” said Gobbetti, who once again praised the creativity and talent of creative director Maximilian Davis, “one of the most brilliant designers,” he mused and whose first collection was unveiled in September.
A capsule collection in November “created good engagement with existing and new customers” and the fall 2023 show presented during Milan Fashion Week last month garnered positive reviews and “strong endorsement,” touted Gobbetti, who has re-branded Ferragamo with a new logo and a signature red hue.
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“Although the macroeconomic environment remains volatile and complex, we are excited by the potential of Ferragamo and will continue to invest behind our growth ambition,” Gobbetti said.
In 2022, sales of footwear climbed 16 percent to 564.2 million euros, representing 44.8 percent of the total.
Leather goods rose 6 percent to 525.5 million euros, accounting for 41.7 percent of the total.
Responding to an analyst, Gobbetti said he saw “an opportunity, not a challenge” in the bags category, which has shown “quite interesting new shapes. I am confident we have the know-how” to build this business,
Sales of apparel climbed 19.7 percent to 83.6 million euros.
The retail channel saw an 11.3 percent gain to 923.5 million euros, representing 73.8 percent of the total. Ferragamo’s ambition is to refresh 40 stores for the spring collection, and so far the changes have driven “a very positive response from customers,” said Gobbetti, who did not forecast a major wave of new openings as the company optimizes the network. A new store concept will be unveiled in 2024, he said.
The wholesale channel was up 13.6 percent to 336.2 million euros.
Chief financial officer Alessandro Corsi said the optimization has been aimed at the U.S. in particular, to “align the brand to a higher positioning,” and to trim the travel retail network.
The stabilization of the wholesale channel is expected by the end of 2023.
Last year, earnings before interest, taxes, depreciation and amortization amounted to 299 million euros, down 2 percent from 305 million euros in 2021, with an incidence on revenues of 23.9 percent.
Corsi admitted the margins in 2023 could be lower than in 2022 due to the inflation and the investments planned.
Sales in Asia Pacific registered a 4.7 decrease to 417.6 million euros, representing 33.1 percent of the total. At constant exchange, revenues were down 10.6 percent. The slowdown was mainly due to the effects deriving from the resurgence of COVID-19 in the region, particularly in China.
“China has seen a definite improvement since the beginning of the year, we are encouraged by the trend,” and by the increased stability, said Gobbetti, although he conceded it was “too early for any indications on the numbers.”
Sales in Japan rose 11.9 percent to 99.1 million euros, accounting for almost 8 percent of revenues
The Europe, Middle East and Africa region reported a 24.7 percent increase in sales to 262 million euros, representing almost 21 percent of sales.
North America revenues climbed 22.3 percent to 391.3 million euros, accounting for 31.1 percent of the total.
Gobbetti said the American cluster had shown much interest in Ferragamo’s new propositions, and that the brand had been “engaging new and existing customers,” but that it was “difficult to read the next few months,” while stating his confidence in the region.
Sales in Central and South America increased 29.7 percent to 90 million euros.
Asked about pricing, Gobbetti said he was “fairly satisfied with the [existing] strategy” and could envision only “technical adjustments.”
He also touted the agreement with Farfetch, and “its enormous support,” which is helping to strengthen the brand’s presence online.
As of Dec. 31, capital expenditure amounted to 56 million euros compared with 44 million euros in 2021, mainly due to renovations of the retail network and investments in the digital channel.
The adjusted net financial position was positive for 371 million euros compared with 373 million euros at the end of December 2021. Including the IFRS16 effect, the net financial position is negative for 204 million euros.