MILAN — Salvatore Ferragamo‘s first set of results presented by newly installed chief executive officer Marco Gobbetti drove the brand’s shares up throughout the day on Wednesday, climbing 11.3 percent to 17 euros by noon and settling at 16.75 euros, up 6.7 percent at the end of trading.
The evening before, the Florence-based company reported a return to the black in 2021, posting a profit of 81 million euros compared with a loss of 72 million euros in 2020, and a 29.5 percent increase in revenues to 1.13 billion euros.
In his report, Flavio Cereda, equity analyst at Jefferies, lamented a lack of additional details or guidance for the year presented by the management, but expects the new CEO to bring change. Coming from Burberry, “the contrast is marked,” wrote Cereda, as Ferragamo is strong where the British brand “is weak” in terms of supply chain, and vice versa, regarding newness and digital.
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“If I had to single out one priority, it’s overall growth,” said Gobbetti during the call with analysts and the press. “We need to give new energy to fuel it. The brand has history, affection around the world, it has a great network of stores, and an excellent supply chain and a great team around the world, so we can do a lot more. We have all the elements to drive a business with more significant volume through our retail network, both physical and digital. I am aware we need investments to drive growth and I am preparing my strategic plan.”
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More specific details will be discussed during the call to comment on first-quarter sales on May 10, said Gobbetti.
Cereda commended Gobbetti’s intention to hire a new creative director, in the wake of Paul Andrew’s exit last spring. “Clearly a new strategic direction specifically on product is coming: whether Gobbetti can manage the family as others before him failed to do is a different question,” noted Cereda, adding that “brand heat is poor: change is welcome but too early to take a view given the context.” Ferragamo “needs a shake-up, so in the absence of M&A news flow in coming months will be king,” he concluded, while noting that year-end figures were somewhat above expectations.
Equita Sim, on the other hand, said the figures were “well beyond expectations” and confirmed its “buy” rating.
Analysts shone the light on the operating profit in the last quarter of 2021, which rose to 59 million euros against a consensus of 30 million euros.
Banca Akros stated that with “a significant increase in profitability,” the company “can now focus on the development of revenues.” However, its analysts were cautious because the current geopolitical risks, from the resilience of the pandemic in certain areas to the war in Ukraine, could dent the confidence of consumers, especially in Europe, where it’s expected it will be another year of fewer tourists.
Mediobanca Securities also addressed the uncertainties caused by geopolitical issues, which will “put pressure on the shares and volatility could prevail in the short term.” Ferragamo’s results also confirmed the “recovery of profitability seen in the luxury goods sector in the last quarter of 2021.”
Kering, for example, reported a 31.9 percent jump in revenues in the fourth quarter, a 25 percent improvement over 2019. At Moncler, fourth-quarter sales climbed 40 percent compared with the same period in 2019. Organic sales at LVMH Moët Hennessy Louis Vuitton’s luxury conglomerate’s key fashion and leather goods division rose 51 percent in the fourth quarter, versus the same period in 2019.