Salvatore Ferragamo sales drop by 30% in Q1 2020
In 2019, Salvatore Ferragamo managed to get back on track after two troubled years, but its 2020 financial year is threatened by the economic crisis caused by the Covid-19 pandemic. In Q1, the Italian luxury label's revenue dropped significantly, losing 30.6% compared to the same period a year earlier (and falling by 31.4% at constant exchange rates), to reach €220 million.
“The group recorded a solid performance in all its main markets in January, but results gradually deteriorated in February and March, first of all in China and Asia, then in Europe, America and the rest of the world, as the pandemic caused by Covid-19 spread rapidly,” stated Salvatore Ferragamo in a press release.
The drastic drop in sales is explained by the spate of Ferragamo store closures, and by diminished footfall in the stores that remained open. The label recorded a 28.6% revenue shortfall in its direct distribution network, while sales in the wholesale channel fell by 33.7% compared to Q1 2019. The wholesale channel was notably penalised by order cancellations, especially in the travel retail segment.
Given the situation, Salvatore Ferragamo has pushed back its AGM, initially scheduled on April 21, to May 8. The board of directors also decided to withdraw its proposal to distribute a dividend for the 2019 financial year. “The distribution of a dividend might be re-evaluated once the general economic situation will be clearer,” said Ferragamo. Finally, an executive committee has been set up to deal with “the emergency caused by the Covid-19 pandemic.”
In 2019, Salvatore Ferragamo generated a revenue of €1.38 billion, up 2.3% compared to 2018, a year in which the label, suffering from a brand positioning problem, recorded a revenue shortfall of 3.4% and a 21.1% decline in net income. The previous year, 2017, had also been a tough one.
In an interview published by MF Fashion on Tuesday, the label’s CEO Micaela Le Divelec Lemmi said that the first few days following the reopening of Ferragamo’s stores in China prompted “renewed hope, and there was the glimpse of a potentially rapid recovery.”
Scepticism prevails however, as stores in some regions of China have been closed again, there being a risk of the epidemic rebounding. Nevertheless, online sales in China are recovering. “It seems there is a genuine yearning for a return to a carefree, normal life,” said Le Divelec Lemmi.
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