Mixed half-year for Salvatore Ferragamo Group
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While retail revenue rose, net profit fell 15.4 per cent for Italian luxury goods company Salvatore Ferragamo Group for its first half to the end of June.
Retail revenue was up 4.7 per cent, offset by a 4.7 per cent drop in wholesale revenue because of destocking activity.
Revenues reached €718 million (US$848 million), up 1.1 per cent year on year, yielding a net profit of €76 million compared to €90 million for the same period last year. Revenue growth at constant exchange rates was 0.1 per cent.
Led by China, Asia Pacific was the group’s top market in terms of revenues, increasing by 6.1 per cent (4 per cent at constant exchange rates), despite a soft trend in South Korea mainly because of a significant drop in the number of Chinese tourists, and a still negative performance in Hong Kong in particular.
China’s retail revenues grew 12.2 per cent (15.5 per cent at constant exchange rates) for the half-year.
In Japan, the company’s sales fell 3.4 per cent (3.5 per cent at constant exchange rates) because of a strategic rationalisation of the wholesale channel. Retail stores had a positive performance.
Questions & Answers
Q.Why did the company's net profit fall despite an increase in overall revenue?
Why did the company's net profit fall despite an increase in overall revenue?
Net profit fell by 15.4 per cent, reaching €76 million, down from €90 million last year. This occurred even as total revenues rose 1.1 per cent, partly due to a 4.7 per cent drop in wholesale revenue from destocking.
Q.Which region was the strongest performer for Salvatore Ferragamo Group?
Which region was the strongest performer for Salvatore Ferragamo Group?
Asia Pacific was the group's top market, with revenues increasing by 6.1 per cent. This growth was mainly driven by China, where retail revenues saw a significant rise of 12.2 per cent.
Q.What caused the decline in wholesale revenue for the company?
What caused the decline in wholesale revenue for the company?
Wholesale revenue dropped by 4.7 per cent during the first half of the year. This decrease was attributed to destocking activity, as stated in the article.
Q.What led to the fall in sales for the company in Japan?
What led to the fall in sales for the company in Japan?
Sales in Japan decreased by 3.4 per cent, which the company attributed to a strategic rationalisation of its wholesale channel. However, retail stores in Japan showed a positive performance.
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