Salvatore Ferragamo posts positive FY19, warns of coronavirus impact on future sales

As of December 31, 2019, the Salvatore Ferragamo Group reported total Revenues of 1,377 million euros (1,561 million dollars), up by 2.3 percent at current exchange and 1.3 percent at constant exchange rates. The company said in a statement that revenues in the fourth quarter registered a 2.1 percent increase at current exchange and remained stable, down 0.1 percent at constant exchange rates.

Considering the rapid progression of coronavirus, Salvatore Ferragamo said, the uncertainties regarding the efficiency of the rules, measures and capabilities of the countries to face the event, the first evidences of inverse reaction in China where the epidemic started and the uncertainties on the extension of the economic and social impacts of the Covid-19, it is not possible to forecast, its duration nor its magnitude, and consequently to evaluate in a reliable way the real impacts on the performance and on the financial statements of the group.

Review of Salvatore Ferragamo’s Q4 and annual results

At the year-end, the group’s retail network counted on 654 points of sales, including 393 directly operated stores (DOS) and 261 third party operated stores (TPOS) in the wholesale and travel retail channel, as well as the presence in department stores and multi-brand specialty stores.

In FY 2019, the retail distribution channel posted consolidated revenue rise of 2.4 percent or 1.1 percent at constant exchange and perimeter (like-for-like). Fourth quarter retail revenues increased 2 percent but dropped 1 percent at constant exchange rates, with a positive 0.2 percent like-for-like performance.

The wholesale channel registered an increase in revenues of 3.1 percent or 3 percent at constant exchange rates due to the good performance of the travel retail channel. In the fourth quarter, wholesale revenues were up 2.6 percent at constant exchange rates.

Salvatore Ferragamo’s trading performance across core markets

The company added that Asia Pacific area is confirmed as the group’s top market in terms of revenues, increasing by 1.1 percent or 0.7 percent at constant exchange rates. In FY19, the retail channel in China recorded a revenue growth of 13.8 percent or 12.6 percent at constant exchange rates. The 4Q 2019 performance in the area, the company said, continued to be significantly negatively impacted by the difficult geopolitical situation occurring in Hong Kong, where retail sales were down over 50 percent against 4Q 2018.

EMEA posted, in FY 2019, an increase in revenues of 5.3 percent or 5.1 percent at constant exchange rates, with a further acceleration in the 4Q of 9.4 percent at constant exchange rates due to the double-digit performance of the retail channel. North America recorded a revenue increase of 0.7 percent or drop of 0.6 percent at constant exchange rates in FY19, with a positive performance in 4Q 2019 of 2.2 percent at constant exchange rates.

The Japanese market registered a 0.5 percent or 2.8 percent decrease in revenues at constant exchange rates in FY19, while fourth quarter revenue decreased 9.5 percent at constant exchange rates. Revenues in the Central and South America in FY19 were up 7.1 percent or 4.6 percent at constant exchange rates.

Among the product categories, at constant exchange rates, footwear was up 3 percent, handbags and leather accessories 2.8 percent, while fragrances were down 7.9 percent compared to FY18.

In FY19, the gross profit increased by 3.7 percent to 893 million euros (1,013 million dollars), while its incidence on revenues was up 90 basis points, moving to 64.9 percent. In 4Q 2019 gross profit incidence on revenues remained stable at 65.1 percent. EBIT excluding IFRS162 was down 8.2 percent at 138 million euros, with an incidence on revenues of 10 percent from 11.1 percent. The profit before taxes was down 9.7 percent at 123 million euros, with an incidence on revenues of 8.9 percent vs. 10.1 percent in the same period of last year. Net profit for the period amounted to 92 million euros, up by 1.7 percent, while net profit excluding IFRS162 was 91 million euros, up 3.4 percent.

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Picture:Facebook/Salvatore Ferragamo