Luxury giant Salvatore Ferragamo faces a steep 41% drop in operating profit in 2024.
- Revenue plummets due to a 23.1% decrease in the wholesale sector.
- Direct-to-consumer sales revenue declines by 8.1% during this period.
- The Asia Pacific region experiences a significant 17% fall in market sales.
- CEO Marco Gobbetti outlines strategic adjustments to tackle the market slowdown.
The Italian luxury brand Salvatore Ferragamo has reported a considerable decline in its operating profit, showing a 41% year-on-year decrease for the first half of fiscal 2024. This decline represents a drop from €47m (£40m) in 2023 to €28m (£24m) in 2024. The company’s revenue also experienced a substantial reduction, decreasing by 12.8% year-on-year to €523m (£446m).
A major factor contributing to this downturn is the notable drop in wholesale revenue, which fell by 23.1%. Concurrently, the revenue from direct-to-consumer (DTC) sales also saw a decline of 8.1%, amounting to €382m (£326m). This trend highlights a broader market contraction affecting the brand’s financial health.
The challenging consumer environment has been particularly evident in the Asia Pacific market, where sales dropped by 17% compared to the previous year. Europe followed with a 16.1% decrease, compounding the overall decline in international sales. CEO Marco Gobbetti attributed this to an ongoing demand slowdown, which has significantly impacted the company’s financial performance.
Gobbetti commented, “We have also continued to experience weakness in the wholesale channel, exacerbated by a more selective distribution strategy.” This strategic shift aims to enhance Ferragamo’s market position despite the prevailing hurdles.
In response to these challenges, Ferragamo plans to focus on enhancing top-line performance and profitability. The CEO emphasised a refreshed product offering and innovative marketing approaches, coupled with a richer customer experience and new store concepts, as pivotal aspects of their strategy to revive financial stability.
Ferragamo’s strategic adaptations aim to counter the ongoing market challenges and restore profitability.
