In the first quarter, Salvatore Ferragamo saw revenues grow by 10.3 percent year-on-year to €244.6 million, missing market expectations by about €1 million. At constant currency rates, the top line increased by 13.0 percent driven by China, which rebounded strongly after bearing the brunt of the Covid-19 outbreak in the first quarter of 2020.
The company also significantly improved its operating profits thanks to an improved product mix and a significant reduction in costs, with operating expenses down by 10.2 percent to €149.7 million.
Ferragamo’s global footwear sales were up by 8.0 percent to €99.2 million, with constant currency sales up by 11.9 percent. Leathergoods and handbags sales increased by 18.2 percent at current exchange rates to €106.8 million, and increased by 19.6 percent in local currencies.
Shoes and leathergoods increased their combined share of total sales to 84.1 percent from 82.1 percent a year earlier.
By region, Ferragamo’s revenues in Europe, the Middle East and Africa (EMEA) declined by 20.5 percent to €47.3 million. In local currencies, sales were down by 22.5 percent, hit by Covid-19-related lockdowns and a lack of tourists. In North America, quarterly revenues increased by 9.9 percent to €58.5 million, and advanced by 18.2 percent on a currency-neutral basis.
In Asia-Pacific, excluding Japan, the top line surged by 50.6 percent to €104.6 million. At constant currency rates, the region’s top line grew by 51.7 percent. In Greater China, the company’s retail sales were up by 105.0 percent year-over-year at constant currency rates and up by 6.1 percent when compared with the first quarter of 2019. In mainland China, retail sales were up by more than 128 percent year-on-year and by 39.4 percent against the first quarter of 2019. In South Korea, the retail channel was up by 33.7 percent from the first quarter of 2020 and by 25.4 percent from two years earlier at constant exchange rates.
In Japan, sales dropped by 9.4 percent to €22.1 million. In yen, the decline reached 6.5 percent as the country continued to be penalized by Covid-19-related restrictions.
In Latin America, sales slumped by 20.1 percent to €12.2 million. At constant currency rates, they dropped by 10.0 percent. Ferragamo registered positive trends in all markets except in Mexico, where the country continued to be impacted by lockdowns.
Retail sales for the whole company increased by 17.2 percent to €166.7 million, or by 20.8 percent at constant currency rates. Comparable store sales were up by 14.7 percent.
At the end of March, Ferragamo had a network of 638 mono-brand stores, of which 390 were directly-operated stores (DOS) and 248 were points of sale run by third parties (TPOS).
Wholesale revenues dropped by 0.7 percent to €75.9 million, but grew by 0.3 percent in local currencies, weighed down by a negative trend in the travel retail channel.
The gross margin widened to 64.2 percent from 58.7 percent a year earlier thanks to an increase in full-price sales and lower provisions for obsolescence. The Ebidta margin increased to 19.5 percent from 5.2 percent. The net loss was reduced to €0.6 million from €41.4 million.