MILAN — The Salvatore Ferragamo label offers “enormous potential,” said CEO Marco Gobbetti during his first call with analysts and journalists on Tuesday, commenting on the Florence-based company’s return to the black last year. “This is an extraordinary brand built on exceptional family values and heritage and I am excited by the growth potential ahead. Its framework and platform allow us to be ambitious.”
Gobbetti, who held the same role at Burberry and joined Salvatore Ferragamo in January, was questioned repeatedly by the analysts on his strategies and direction for the latter. “The first weeks were excellent, quite intense, I’m learning the company and the business, meeting people, starting to form my initial impressions and priorities,” he related.
“If I had to single out one priority, it’s overall growth. We need to give new energy to fuel it. The brand has history, affection around the world, it has a great network of stores, and an excellent supply chain and a great team around the world, so we can do a lot more. We have all the elements to drive a business with more significant volume through our retail network, both physical and digital. I am aware we need investments to drive growth and I am preparing my strategic plan,” Gobbetti said, adding that more specific details will be discussed during the call to comment on first-quarter sales on May 10.
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He revealed that while the brand’s design team “has been doing a very good job,” he believes “a creative direction is useful and important for a maison like Ferragamo and I intend to put in place a creative director.” Paul Andrew, who last held this title, exited last spring.
Responding to analysts, Gobbetti cautioned against comparing Ferragamo and Burberry. “This is not the right thing to do. Each brand is different. I have learned to treat each brand like an organism, a living being and Ferragamo is a special company that will need an ad hoc strategy. I can say one of the areas we will work on will definitely be the offer. There is the opportunity to create new energy and recruit new consumers, and a strategic revision of the offer is certainly one of the elements of my strategy, an injection of novelty,” he explained. “We are looking at all customer-facing areas — products, stores, touch points, creativity and communication — to create a lot of interest around the brand, and the product offer is key.”
Both Gobbetti and CFO Alessandro Corsi addressed the humanitarian crisis and the war in Ukraine. The CEO expressed his sympathy and support to refugees and said the safety of Ferragamo employees in the impacted areas “remains a priority.”
Asked about the exposure to Russia and Ukraine, Corsi said it is “very limited” and that the company operates in those regions only through third-party stores and a wholesale business, which is “negligible” in Ukraine and “lower than 1 percent” in Russia.
Speaking of Russians shopping outside of their own country, the Europe, Middle East and Africa region is the most impacted with a 2.5 percent exposure last year, he said.
“The impact is still in the early stages and not material so far, but it’s hard to assess how it will develop,” added Corsi. He said the company had seen the same business trends in the first quarter as in the last quarter of 2021.
In the 12 months ended Dec. 31, Ferragamo posted a net profit of 81 million euros, compared with a net loss of 72 million euros in 2020.
Revenues rose 29.5% to 1.13 billion euros, compared with 877 million euros in the previous year. At constant exchange rates, sales grew 31.4%. Revenues in the fourth quarter climbed 20.8%.
Operating profit amounted to 143 million euros compared with an operating loss of 63 million euros in 2020.
Earnings before interest, taxes, depreciation and amortization almost doubled to 305 million euros compared with 158 million euros at the end of Dec. 2020.
Retail sales increased 30.2% to 829.5 million euros, representing 73% of the total.
At the end of the year, there were 409 directly operated stores and 238 units operated by third parties. Of these, 50% are in travel retail.
In the last quarter of 2021, retail revenues increased 17.1% compared with the same period the year before, exceeding pre-COVID-19 levels, mainly driven by the performance in five markets: Greater China, North America, Latin America, Korea and Japan.
Ferragamo’s direct e-commerce channel in 2021 saw sales climb 41.3%. In the last quarter, it increased by 21.8% at constant exchange rates.
The wholesale channel registered a 28.6% increase in revenues to 295.9 million euros, accounting for 26.1% of the total. In the last quarter, wholesale revenues grew 32.2%.
Asked about price increases, Corsi said they had taken place in the second part of last year and at the beginning of 2022, forecasting “more than proportional price increases in the second part of 2022.”
Inflation is “not unmanageable for luxury players,” he said.
In 2021, the Asia Pacific area was confirmed as the group’s main market in terms of revenues, growing 17.3% and reaching sales of 436.2 million euros, representing 38.4% of the total.
At constant exchange rates, the retail channel in China posted a 9.4% increase and in Korea it was up 13.6%.
Sales in Japan rose 3.7% to 90.1 million euros. At constant exchange rates, they climbed 8.1%.
The Europe, Middle East and Asia area remained penalized in the year by the lockdown of stores and mainly by the limited flow of tourists, reporting a 21.2% sales increase to 217 million euros, representing 19.1% of the total. In the last quarter, revenues accelerated, registering a 29.7% increase at constant exchange rates.
Sales in North America rose 71.5% to 323.5 million euros, accounting for 28.5% of the total. At constant exchange rates, they grew 82.6%. In the last quarter, revenues increased by 48.8%.
Revenues in the Central and South America last year were up 37.3% to 68.5 million euros.
By category, sales of shoes were up 29.7% to 486 million euros, accounting for 43% of the total.
Leather goods grew 27.5% to 495.7 million euros, representing 44% of the total.
Apparel grew 39.6% to 70 million euros.
Full 2021 figures excluded the fragrance business, defined as “discontinued operations” following Ferragamo’s exclusive licensing deal with Inter Parfums Inc. inked in July last year. In 2021 the fragrance business decreased 20.4% to 31.3 million euros.
As of Dec. 31, capital expenditures totaled 44 million euros, compared with 29 million euros in 2020, due to increased investments in the retail network.
The net financial position was positive at 373 million euros compared with 139 million euros at the end of December 2020.
This story was reported by WWD and originally appeared on WWD.com.
