Ferragamo H1 net income declines 15.4 percent

As of June 30, 2017, the Salvatore Ferragamo Group posted total revenue of 718 million euros (850 million dollars), reporting a 1.1 percent against 1H 2016. Revenue growth at constant exchange rates was 0.1 percent. The net profit for the period, including a negative minority interest of 2 million euros (2.3 million dollars), was 76 million euros (90 million dollars), marking a 15.4 percent decrease. The group net profit was 78 million euros (92 million dollars), marking a decrease of 13.1 percent.

Retail revenues rose 4.7 percent, but whole down in H1

The group's retail network counted on a total of 679 points of sales, including 401 directly operated stores (DOS) and 278 third party operated stores (TPOS) in the wholesale and travel retail channel, as well as the presence in department Stores and high-level multi-brand specialty stores. In 1H the retail distribution channel posted consolidated revenues up by 4.7 percent or 4 percent at constant exchange rates, with a substantially stable growth (down 0.2 percent) at constant exchange rates and perimeter (like-for-like) against 1H 2016.

The wholesale channel, the company said, penalized by the destocking activity awaiting for the new collections and the political tensions in South Korea, registered a decrease in revenues of 4.7 percent or 6.1 percent at constant exchange rates.

Group’s performance across geographies

The Asia Pacific area is confirmed as the group's top market in terms of revenues, increasing by 6.1 percent or 4. percent at constant exchange rates, despite the soft trend in South Korea, mostly due to the significant decrease of Chinese tourists, and the still negative performance in particular in Hong Kong. On the contrary the retail channel in China recorded a revenue growth of 12.2 percent or 15.5 percent at constant exchange rates in the first six months of 2017.

Europe posted a decrease in revenues of 2.4 percent or 2 percent at constant exchange rates, with a solid growth in the retail channel and a negative trend for the wholesale business, negatively impacted by the destocking activity. North America recorded a revenue decrease of 2.2 percent or 4.2percent at constant exchange rates, also negatively impacted by the department stores sales. The Japanese market registered a 3.4 percent decrease or 3.5 percent at constant exchange rates, due to the strategic rationalization of the wholesale channel, while the retail stores recorded a positive performance.

Revenues in the Central and South America in continued to report growth, registering a 7.2 percent or 9.9 percent increase at constant exchange rates.

Among the product categories, shoes posted a 1.3 percent increase, handbags and leather accessories 0.7 percent and fragrances 6.7 percent.

Ferragamo gross profit declines 1.5 percent

In 1H 2017 the gross profit decreased by 1.5 percent to 468 million euros (554 million dollars) and its incidence on revenues was down 180 basis points, moving to 65.2 percent, from 67 percent in 1H 2016, mainly due to the higher portion of sales in the secondary channel, in line with the normalization of inventory levels.

The gross operating profit (EBITDA) decreased by 17.9 percent over the period, to 135 million euros (159 million dollars), with an incidence on revenues down to 19 percent, from 23.4 percent in 1H 2016. Operating profit (EBIT) decreased to 105 million euros (124 million dollars) or 22.6 percent in 1H 2017, with an incidence on revenues of 14.6 percent from 19.1 percent.

The profit before taxes amounted to 98 million euros (116 million dollars) or decline of 23.3 percent, and its incidence on revenues was 13.6 percent against 18 percent in 1H 2016.

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