Italian luxury brand Salvatore Ferragamo has experienced a notable drop in operating profit for the first half of 2024, reflecting challenges in the market.
- The company’s profit fell by 41% year-on-year, influenced by reduced demand in the wholesale sector and a downturn in the Asia Pacific region.
- Operating profit for the first half of 2024 was €28 million, a decline from €47 million in the same period the previous year.
- Revenue decreased by 12.8%, primarily due to a significant decrease in wholesale earnings and direct-to-consumer sales.
- CEO Marco Gobbetti cites an ongoing difficult consumer environment, with Asia Pacific and Europe seeing marked declines in sales.
In the first six months of 2024, Salvatore Ferragamo reported a stark 41% decline in operating profit, a figure that underscores a difficult period for the luxury brand. This decline is largely attributed to persistent challenges in global markets, particularly in the wholesale sector and the Asia Pacific market, where demand has softened significantly.
The operating profit for Ferragamo was recorded at €28 million, down significantly from €47 million reported during the same timeframe in 2023. This hefty drop in profit is accompanied by a 12.8% decrease in overall revenue, indicating not just profitability issues but also a broader sales challenge.
Wholesale revenue plunged by 23.1%, a troubling figure that highlights the decreasing demand Ferragamo is facing in this segment. Similarly, direct-to-consumer sales saw a decline of 8.1%, bringing the total to €382 million from €416 million the previous year. These figures reflect the broader issues the brand is encountering in connecting with and retaining customers.
Marco Gobbetti, the CEO of Salvatore Ferragamo, has pointed out that these results are a manifestation of an “ongoing demand slowdown.” He emphasized that the consumer environment remains challenging, especially within the Asia Pacific region, which experienced a 17% decrease in sales year-on-year, followed by a 16.1% drop in Europe.
Gobbetti also acknowledged weaknesses within the wholesale channel, further exacerbated by a selective distribution strategy. In response, Ferragamo plans to concentrate on improving top-line performance and profitability through an expanded audience and enhanced engagement strategies. This includes a refreshed product lineup, a comprehensive marketing approach, enriched customer experiences with tailored CRM initiatives, and innovative store concepts.
Salvatore Ferragamo is navigating a challenging economic landscape, requiring strategic adjustments to counter declining profits and revenue.
