- Prachi Singh |
As of December 31, 2018, the Salvatore Ferragamo Group reported total revenues of 1,347 million euros (1,520 million dollars), down 3.3 percent at current exchange and 1.7 percent at constant exchange rates, while revenues in 4Q 2018, the company said, registered a 3.5 percent or 1.8 percent at constant exchange. Net profit for the period, including a minority interest of 2 million euros, was 90 million euros (101.5 million dollars), marking a 21.1 percent decrease, while the FY18 group net profit was 88 million euros (99.3 million dollars), compared to 119 million Euros in FY 2017, marking a decrease of 25.5 percent.
Review of Salvatore Ferragamo’s FY18 and Q4 results
At December 31, 2018, the group's retail network counted on a total of 672 points of sales, including 409 directly operated stores (DOS) and 263 third party operated stores (TPOS) in the wholesale and travel retail channel, as well as the presence in department and multi-brand specialty stores. In FY18, the retail distribution channel posted consolidated revenues drop of 3 percent or 1.1 percent at constant exchange rates, with a decrease of 1.3 percent at constant exchange rates and like-for-like, mainly due to lower revenues in the secondary channel. In 4Q 2018 retail revenues remained stable at constant exchange rates, with a 1 percent total like-for-like performance, but positive in the primary channel in all geographical areas.
The wholesale channel, the company added, penalized during all the year 2018 by the destocking activity and the strategic rationalization, registered a decrease in revenues of 3.8 percent or 2.7 percent at constant exchange rates. In the fourth quarter, wholesale revenues were down 5.4 percent at constant exchange rates, due to the unfavourable performances in EMEA and US, while the Asia Pacific area and the travel retail channel registered positive trends.
Revenues in the Asia Pacific area were down 1 percent but up 0.8 percent at constant exchange rates, with a positive performance in Greater China, partially penalized by the negative performance in South East Asia. In 4Q, the retail channel in China recorded a revenue growth of 7.6 percent or 10.1 percent at constant exchange rates. Sales in EMEA posted, in 2018, decreased 6.1 percent or 5.9 percent at constant exchange rates due to the negative wholesale business in the last part of the year due to the delayed deliveries following the change of a commercial partner in a strategic market in the Middle East.
North America recorded a revenue decrease of 5.4 percent or 2.4 percent at constant exchange rates in FY 2018, impacted by the negative trend of the department stores sales. The Japanese market registered a 0.4 percent or 1 percent decrease at constant exchange rates in FY 2018, with retail stores recording a positive performance at constant exchange rates both in FY 2018 and in 4Q 2018, while negatively impacted by the strategic rationalization of the wholesale channel. Revenues in the Central and South America in FY 2018 were down 1.9 percent, but up 4.2 percent at constant exchange rates.
Among the product categories, at constant exchange rates, handbags and leather accessories were up 2.6 percent and fragrances 6.5 percent, while footwear posted a 3.9 percent decrease in FY 2018, while in 4Q 2018 footwear reported a growth in revenues in the primary retail channel.
Financial highlights of Salvatore Ferragamo’s results
Gross profit decreased by 4.1 percent to 862 million euros in 2018. Its incidence on revenues was down 50 basis points, moving to 64 percent, from 64.5 percent of FY 2017, which the company said was mainly due to the negative impact of currencies, partially compensated by the improvement of full price sales.
The EBITDA decreased by 13.8 percent over the period, to 214 million euros (241.4 million dollars), with an incidence on revenues down to 15.9 percent, from 17.8 percent of FY17. The operating profit (EBIT) decreased 19.5 percent from 186 million euros in FY17 to 150 million euros (169 million dollars) in FY 2018, with an incidence on revenues of 11.1 percent from 13.4 percent. Profit before taxes dropped 21.6 percent to 136 million euros (153.4 million dollars), and its incidence on revenues was 10.1 percent compared to 12.4 percent in FY 2017.