Salvatore Ferragamo enjoyed very strong growth in China during the third quarter and in October. At constant-currency rates, retail sales in the Asian country surged by 38.3 percent year-on-year during the quarter and further accelerated in October. The Italian fashion company also posted “solid” retail sales growth in South Korea and in Taiwan during the quarter and which continued in October.
The performances registered in the Asian countries, enabled the company to post higher-than-expected third-quarter sales, down by a reported 18.9 percent to €234.7 million but beating the market consensus by over €8 million. In the quarter, Ferragamo also posted positive Ebit of €4 million and a net cash generation of €17 million.
In the first nine months of the year, the company’s sales totaled €611.2 million, declining by 38.5 percent year-on-year on a reported basis and by 38.6 percent at constant currency rates.
In the Asia-Pacific area, excluding Japan, nine-month sales amounted to €258.7 million, decreasing by 30.6 percent on reported basis and by 30.3 percent at constant exchange rates.
Japan registered a 30.9 percent decrease in sales to €60.2 million. In yen, the decline reached 31.2 percent year-on-year in the nine months, but was only 13.6 percent in the third quarter and the trend turned to a “solid” year-on-year increase in October.
Europe, the Middle East and Africa saw sales drop by 45.0 percent to €142.4 million in the nine months. At constant currency rates, the decline was 44.6 percent, driven by stores closures and a lack of tourists.
In North America, revenues decreased by 45.1 percent to €120.6 million. In local currencies, the top line dropped by 47.5 percent. In Central and South America sales were €29.3 million, down by a reported 47.5 percent and by 42.0 percent in local currencies.
Global footwear sales reached €253.2 million, falling by 39.7 percent in euros and by 40.0 percent in local currencies, while revenues from leathergoods and handbags totaled €259.8 million dropping by 33.8 percent in current currencies and by 33.7 percent at constant exchange rates.
By distribution channel, retail sales fell by 35.3 percent to €415.9 million, with comparable sales down by 35.2 percent. As of Sept. 30, the retail network amounted to 646 points of sales, including 393 directly operated stores and 253 third-party operated stores.
Wholesale revenues fell by 44.5 percent to €187.9 million. At constant currency rates, sales retreated by 45.6 percent, mainly penalized by the performance of the travel retail channel and the fragrance business.
The Ebitda margin shrank to 12.7 percent from 24.4 percent a year earlier and the Ebit margin was a negative 11.5 percent compared with a positive 10.6 percent. Ferragamo posted an attributable net loss of €96.5 million against a €60.0 million profit.
Ferragamo did not provide a full-year guidance but remains committed to cutting costs. In the first nine months of the year, the company trimmed operating expenses by 18.8 percent, mainly thanks to lease renegotiations and cuts in personnel costs.
The brokerage Equita reduced its forecast for the full-year top line for the fashion company by 2 percent to €932 million due to the deterioration of the business environment in Europe with the re-introduction of Covid-19 related lockdowns. But thanks to the cost-cutting program, it is more optimistic about profitability and believes adjusted Ebitda will total €21 million.