Ferragamo Stands Firm on Maximilian Davis and Strategy Despite Sales Dip, Leadership Change
Salvatore Ferragamo is standing by its strategy, its creative director Maximilian Davis and the focus on its core business of footwear and leather goods despite the recent shake-up and exit of chief executive officer Marco Gobbetti. Also, the Ferragamo family is not going anywhere.
On Thursday evening, the Florence-based company reported a 10.5 percent drop in 2024 sales to 1.03 billion euros, and, in a recorded message during a conference call with analysts, chairman Leonardo Ferragamo thanked Gobbetti for bringing “forward a significant renewal in terms of positioning, product assortment and organizational evolution. This will be a solid basis for future development.”
He confirmed the group had started the process of selecting a candidate for the position of CEO “that we will announce in due time.”
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As reported, the chairman assumed executive powers, supported by a transitional chairman advisory committee comprising James Ferragamo, chief transformation and sustainability officer; former chief financial officer Ernesto Greco, and former CEO Michele Norsa, taking on the role of special chairman adviser.
Leonardo Ferragamo also gave his “full support” to Davis and his team. “In the coming months, the objective will be to consolidate the results achieved so far, while steadily progressing with an agile and inflexible approach. First of all, we will reinforce the link between brand heritage, product and brand communication. In addition, we will focus on customer engagement. The in-store experience will be the epicenter of the dialogue with our customers, together with an enhanced online involvement.”
Gobbetti, who had joined Ferragamo in January 2022, named Davis creative director in March 2022.
In light of the macro environment, Leonardo Ferragamo expressed caution on short-term expectations, while continuing to invest in brand image, product and distribution, “confident in our capabilities to navigate the market dynamics.”
Addressing ongoing rumors about divesting from the company, he said “all my family remain fully committed, and this leadership transition will be an opportunity to strengthen our culture and move forward with renewed energy,” confident in the potential of the brand.
The year was impacted by the slow performance in China and Asia-Pacific. The direct-to-consumer channel was down 5.8 percent to 776.7 million euros as the positive performance in Europe, the U.S., Japan and Latin America was offset by the negative results in the Asia-Pacific region.
As of Dec. 31, there were 367 directly operated stores compared with 374 in 2023. The company is in the process of refurbishing the network, and this is expected to be completed in two to three years, Greco said.
The wholesale channel decreased 21.2 percent to 232.5 million euros, also due to the planned rationalization of the channel.
Sales in the Europe, Middle East and Africa region were down 8.9 percent to 246.4 million euros. Brisk American tourist spending in Europe did not compensate for the lack of Chinese shoppers, Greco said.
“Traffic is the name of the game,” he said. “Customer traffic is the problem and it’s really down in China and Asia-Pacific.”
Speaking in general terms, he also admitted the company “should better align our merchandising, and communication activity to better target our customers, also with additional store events.”
Revenues in North America were down 2.6 percent to 307.6 million euros, representing 30.5 percent of the total and impacted by the wholesale channel.
Sales in Central and South America were down 3 percent to 80.9 million euros.
Sales in Asia-Pacific fell 19.7 percent to 291.4 million euros, accounting for 28.9 percent of the total.
Japan was down 4.3 percent to 83 million euros.
Ferragamo reported a net loss of 68.1 million euros compared with a profit of 26.2 million euros in 2023. Excluding the Impairment Test charge, net profit for the period totaled 16 million euros.
Earnings before interest, taxes depreciation and amortization amounted to 215 million euros, down 14.5 percent.
Adjusted operating profit, excluding the 84 million euro negative cost component of the Impairment Test, amounted to 35 million euros compared with 79 million euros.
By category, sales of footwear were down 9.9 percent to 461 million euros.
Leather goods decreased 8.5 percent to 412.8 million euros and apparel fell 17.7 percent to 60.4 million euros.
“We do not want to shake up our strategy, but capitalize on the learning curve, adjusting and fine-tuning to accelerate execution,” Greco said. “The idea is to be more focused on leather goods, shoes and bags.”
He said the company had seen a shift to a younger demographic, and higher online sales. “In the fourth quarter, online sales were up 27 percent and order value rose 30 percent.”
He said he was “cautious in the short term but we are strengthening our brand positioning and confident in top line and profitability growth.”
About the current trend, Greco said that in the first two months of 2025 revenues were stable, positive and in line with the last quarter of 2024.
Asked about the impact of tariffs, Greco said that, with the international tension, they “do not facilitate business but luckily our production costs are a small part of our selling price.”
As of Dec. 31, the net working capital decreased 2.6 percent to 222 million euros.
Capital expenditure amounted to 71 million euros, in line with the 72 million euros spent in 2023, mainly focusing on the renovation of the retail network.
As of Dec. 31, the net financial position was positive for 173 million euros compared with 224 million euros positive at the end of December 2023. Including IFRS16 effect, the net financial position was negative for 504 million euros.
