Salvatore Ferragamo reported a 25.5 percent drop in its 2018 net profit excluding minority interests to €88.4 million and also cut its annual dividend to €0.34 per share from €0.38 a year earlier. As already reported (Shoe Intelligence Vol. 21 N° 3+4 of Feb. 9), the company's revenues for the full year were down by 3.3 percent to €1,347 million, with e-commerce accounting for 4.5 percent of the total turnover. The management noted that younger customers have been approaching the Italian brand.
The Ebitda margin diminished to 15.9 percent from 17.8 percent, and the Ebit margin narrowed to 11.1 percent from 13.4 percent. For 2019, the group expects a gradual improvement in profitability despite an anticipated rise in operating costs.
Last year operating costs were reduced by 0.1 percent to €712.2 million. The operating cash flow decreased to €186 million from €279 million, and capital expenditure declined to €71 million from €88 million, while the net cash pile grew to €169 million at the end of the year from €127 million a year earlier.
During a conference with financial analysts, Ferruccio Ferragamo, chairman of the company, said that it is seeing “light at the end of the tunnel” and expects restructuring efforts to bear fruit. He reiterated that the family does not plan to sell the firm.
The group indicated that same-store sales were positive at the beginning of the year compared with a negative 1.3 percent in 2018. The Italian investment bank Banca Akros noted that Ferragamo has had a “positive start” to the year and seems to be “on the right way” to improvement. The investment bank Mediobanca was a bit more downbeat. It sees “big potential” for the fashion house in the long term but stressed a “lack of visibility” in the short run. Overall, financial analysts predict that Ferragamo's revenues and Ebitda will rise by about 3 percent this year, a forecast that the group deems realistic.