Ferragamo posts decline in nine month revenue

As of 30 September 2016, the Salvatore Ferragamo Group posted total revenue of 1,014 million euros (1,089 million dollars), which it said was roughly stable. Revenue was down 0.7 percent at current exchange and 4 percent at constant exchange rates, over the 1,021 million euros (1,097 million dollars) recorded in 9M 2015. In the third quarter, revenue totalled 304 million euros (326 million dollars), up 1.7 percent at current exchange but down 6.2 percent at constant exchange rates.

Third quarter performance, the company said was due to a different trend between retail and wholesale business. In particular, at constant exchange rates, the retail business was stable with 0.1 percent rise against 3.2 percent decline in the first half of 2016, while wholesale registered a decrease of 18.6 percent in the third quarter compared to a 3 percent decrease in the first half.

Revenues in Europe down 5 percent

Europe posted a decrease in revenues of 5 percent compared to 9M 2015, due to lower tourist flows, while third quarter saw an improvement of the retail business, down 6 percent against 11 percent in the first half. Wholesale decreased 12 percent compared to 3 percent growth in in H1.

North America revenues were up by 3 percent but down 4 percent at constant exchange rates in the first nine months. The retail business, despite the strong USD that negatively impacted tourist flows in the United States, reporting sales rise of 11 percent in 9M 2016, while the wholesale business declined 8 percent. At constant exchange rates total revenues in 3Q were down 7 percent, with the retail business up 7 percent and wholesale down 26 percent.

The Asia Pacific area saw stable revenues during the first nine months, with a 10 percent improvement in the third quarter. At constant exchange rates revenues were down 4 percent in 9M and 3 percent in the third quarter. The business in Hong Kong remained negative. The retail business registered a decrease of 15 percent in the third quarter at constant exchange rates against 24 percent decline in H1. The retail channel in China recorded 3 percent rise in revenues at constant exchange rates in the nine month period, with an acceleration in the third quarter.

The Japanese market revenues were down 2 percent at current exchange and 9 percent at constant exchange rates in the nine months, due to the lower Chinese tourist flow impacted by the significant appreciation of the yen against the renminbi). In the third quarter, with a hard comparison base of 25 percent rise at constant exchange rates in the same period last year, the company registered a decreased of 8 percent at current exchange and 17 percent at constant exchange rates.

Nine months revenues in the Central and South America increased 4 percent at current exchange rates and by 13 percent at constant exchange rate, while third quarter revenues were up 10 percent at current exchange and 15 percent at constant exchange rates.

Revenues by retail distribution channel

As of September 30, 2016, the Group's network totalled 673 points of sale, and had 396 directly operated stores (DOS), while the wholesale and travel retail channel included 277 third party operated stores (TPOS), as well as the presence in department stores and multi-brand specialty stores. In the nine month period, the retail distribution channel posted consolidated revenue rise of 1 percent at current exchange and a decline of 2 percent at constant exchange rates and 6 percent on like-for-like basis. In the third quarter, the channel reported 9 percent rise at current exchange rates and stable at constant exchange rates.

The wholesale channel registered a decrease in revenues of 4 percent at current exchange and 7 percent at constant exchange rates in the first nine months. In 3Q revenues decreased by 12 percent at current exchange and 19 percent at constant exchange rates.

Among the product categories, shoes registered revenues rise of 1 percent in the nine months, while handbags and leather accessories were down by 1 percent and fragrances were down 3 percent, but improving in 3 percent in the third quarter.

EBITDA declines 0.7 percent

In the first nine months, gross profit increased 1 percent at 679 million euros (730 million dollars), with an incidence on revenues up by 120 basis points to 67 percent, from 65.8 percent recorded in 9M 2015. EBITDA decreased by 0.7 percent over the period, from 218 million euros (234 million dollars) in 9M 2015 to 216 million euros (232 million dollars). The net profit for the period was 110 million euros (118 million dollars), down 3 percent.

Picture: Salvatore Ferragamo