Ferragamo’s financial performance has seen a marked decline in the first half of 2024.
- The luxury brand reported a 41% drop in operating profit year-on-year, amounting to €28m.
- Revenue fell by 12.8%, with declines in both wholesale and direct-to-consumer sales.
- The Asia Pacific region and Europe witnessed significant downturns in sales.
- CEO Marco Gobbetti cited a challenging consumer environment and a strategic shift in distribution.
Salvatore Ferragamo has experienced a significant downturn in its financial metrics for the first half of 2024. With operating profits plummeting by 41% compared to the previous year, the company reported earnings of €28m, a substantial drop from €47m in 2023.
This decline in operating profit is reflective of an overall revenue fall of 12.8%, from the previous year’s figures to €523m. The most pronounced impact was evident in the wholesale segment, which suffered a 23.1% reduction in revenue.
Direct-to-consumer sales also contracted by 8.1% to €382m, exacerbating the financial challenges faced by the luxury brand. These statistics underscore the pervasive issues affecting Ferragamo’s market performance.
The downturn in the Asia Pacific region has been particularly severe with a 17% year-on-year reduction in sales, compounded by a 16.1% decline in Europe. CEO Marco Gobbetti attributed these challenges to an ‘ongoing demand slowdown’, indicating macroeconomic pressures and shifts in consumer behaviour as underlying causes.
Further stressing the difficulties, Gobbetti highlighted the continued weakness in the wholesale channel, coupled with a more selective approach to distribution. The brand is working to stimulate top-line growth and enhance engagement by revising its product offerings, implementing comprehensive marketing strategies, and enhancing customer experiences through tailored CRM initiatives.
These efforts also include a new store concept aimed at revitalising the brand’s market presence.
In summary, Salvatore Ferragamo is navigating a turbulent market landscape through strategic adjustments aimed at mitigating profit declines.
