Ferragamo flags China-driven sales rise after 2020 loss

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FILE PHOTO: Italian luxury fashion house Salvatore Ferragamo's logo is seen at a store in Zurich

By Claudia Cristoferi

(Reuters) – Italian luxury goods group Salvatore Ferragamo said on Tuesday that China and e-commerce had boosted sales in the year so far, after the COVID-19 pandemic pushed the firm to its first full-year operating loss since it listed in Milan 10 years ago.

Deputy Executive Chairman Michele Norsa, a long-time executive brought back by the Ferragamo family last year to steer the group through the pandemic and a brand revamp, told analysts in a call that he expected sales in China to keep growing by a double-digit percentage.

The coronavirus emergency has hit Ferragamo hard because it is geared towards traveller spending, with many shops in airports. It has also compounded the challenge of rejuvenating a brand famous for shoes worn by Hollywood stars such as Audrey Hepburn.

Overall sales fell 33% in 2020, one of the worst performances in an industry grappling with shop closures intended to curb the pandemic as well as a lack of tourists and travellers in general.

Several sources told Reuters late last year that the majority owners had held informal talks with investors about selling a minority stake in their holding firm. The company denied at the time that the family planned to sell a stake or had met investors.

Asia accounting for more than half of group revenues in 2020, when turnover in the region fell 25.5%.

The Florence-based firm said the first nine weeks of 2021 had seen a positive trend in its retail network and an 86% jump in digital sales. China and Korea are both performing strongly, it said.

Earnings before interests and taxes (EBIT) slumped to a 62 million euro ($74 million) loss in 2020, due also to impairment charges on assets and broadly in line with analysts’ expectations. In 2019, Ferragamo made a 150 million euro profit.

Chief Executive Micaela Le Divelec’s term expires in April, and there is speculation that management may be overhauled.

Two sources close to the matter said on Tuesday the situation was still uncertain in that respect.

Norsa told analysts he could not comment on possible management changes, and that a “normal process” was taking place “in continuity and harmony” ahead of the annual meeting to appoint a new board of directors.

($1 = 0.8415 euros)

(Writing by Valentina Za; Editing by Kevin Liffey)

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