Dive Brief:
- Salvatore Ferragamo SpA reported a 7.6% decrease in revenue to 1.16 billion euros, or about $1.27 billion at current exchange rates, for its 2023 fiscal year, according to a Wednesday news release.
- The brand experienced double-digit declines in each of its distribution channels. The retail channel saw net sales drop by 10.8%, which the company attributed to softening luxury demand at the end of 2023, and net sales for its wholesale channels declined 12.2%, which the company said was due to reduced international travel and weaker U.S.
- The company said it was transitioning its product offerings and looking to optimize its network “against the backdrop of a softening luxury market, especially in the second part of the year.”
Dive Insight:
Earnings for luxury companies have been mixed in 2023’s year-end financial results. While LVMH reported record profit and Hermès saw a 16% revenue boost, other luxury firms including Aeffe, Kering, and now Ferragamo, have seen revenue declines.
A recent report from Saks noted that while luxury consumers are growing more confident in the economy, that positive sentiment isn’t yet translating to increased spending on luxury. However, spending in the category may increase in the second half of 2024, per the report.
Marco Gobbetti, CEO and general manager of Ferragamo, said in the release the company would continue to “pursue our growth ambition, while also protecting profitability through ongoing attention to the quality of sales and disciplined focus on costs.”
“We will continue to work on the full deployment and optimization of the product offer to drive desirability and engagement, generating interest through an impactful communication, also maximizing the potential of all digital touchpoints,” Gobetti said. “We will continue the optimization of the network and at the same time accelerate the rollout of the new store concept.”
Net sales declined in each geographic region in 2023 except EMEA, which saw net sales grow 3.4%. The North America region experienced the steepest decline of 19.3%; The Asia Pacific and Japan regions fell 13.1% and 12.6%, respectively; and net sales in Central and South America fell 7.2%.
