“Patience is needed”. Citi analyst Thomas Chauvet’s comment perfectly captures the situation of Salvatore Ferragamo. The brand, in a difficult context, continues to rack up negative numbers. The road back to growth will be longer than expected. CEO Marco Gobbetti, who defends creative director Maximilan Davis, is also aware of this.
Ferragamo remains in negative area
Ferragamo’s third-quarter revenues fell (at current exchange rates) by 9.6% to EUR 221 million, compared to the same period last year. For the nine months that ended 30 September, sales fell by 11.9% to EUR 744 million, compared to the same period in 2023. Gobbetti pointed to the Asia-Pacific region as “the main phenomenon” of the sales decline. The wholesale channel was also down significantly. In this regard, Ferragamo is not planning “a significant rationalisation of shops”, although it does not rule out “some changes”.
It takes time
Inevitably. Some are beginning to question the ability of creative director Maximilian Davis to guide the brand towards growth. Gobbetti responded to the criticism by saying that he was satisfied with Davis’s new aesthetic. But he stressed that “it takes time to grow and reach a wider audience. Improvement cannot come overnight” (source: WWD). The collections, Gobbetti continued, are “classic and quite refined, and not loud. We want to achieve growth on a high customer base”. As far as the forecast for the fourth quarter is concerned, the CEO still expects slightly negative sales. He also does not expect significant improvements in operating profit, which is under pressure from falling revenues.
Patience is needed
According to Citi, Ferragamo’s figures “were disappointing after the positive impression perceived with the results of the first-half of 2024, according to which the brand seemed to be on the verge of a turnaround”. Citi goes on to point out that “the key initiatives implemented by Gobbetti a couple of years ago seem to make sense. They also seem, however, to be taking a little longer than expected to set a clearer growth trajectory”. On a positive note, full-price sales exceeded expectations. In contrast, wholesale sales were much worse than expected (-13% vs. the -3%/+1% range) also due to low traffic in US department stores.
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