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Sep 22, 2014
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Ferragamo CEO sees higher 2014 results despite global risks

By
Reuters
Published
Sep 22, 2014

MILAN, Italy - Italian luxury leather company Salvatore Ferragamo expects sales and profitability to rise this year, its CEO said, predicting an improvement in the final part of the year after global political risks weighed on the sector in the third quarter.

Ferragamo posted higher-than-expected second-quarter core earnings with sales growth broadly unchanged from the first three months despite cooling Asian markets, which hit many of its peers, and the Ukraine crisis keeping Russian tourists home.


Ferragamo Spring/Summer 2015 (Source : Pixel Formula)



"It will be another year of growth both in terms of sales and profitability," CEO Michele Norsa told reporters on Sunday ahead of a showcasing of Ferragamo's Spring/Summer 2015 women's collection, featuring long skirts and high heel wedge sandals.

Norsa said global political tensions had created an "unfriendly" environment in recent months, weighing on consumer mood and raising safety concerns for travellers. However, things were improving and the remainder of the year would be a "good period."

"We do expect a better end of the year, in general terms but also specifically for the brand because we've been investing: we're opening stores in China, Korea, the United States and many airports."

Sales at the Florentine group rose 6 percent in the first-half to 659 million euros ($845 million) and its chief financial officer told analysts in August that market forecasts for full-year revenue of 1.330 billion to 1.335 billion euros were "reasonable." Sales in 2013 were 1.258 billion euros.

The CFO also said the gross margin would be similar to the previous year's.

Ferragamo, which listed in mid-2011, has the highest exposure in its sector to travellers spending in places such as airports.

Norsa said the travel retail segment was still expanding rapidly with Chinese and Africans replacing Russian tourists so that passenger traffic in August in Europe rose 7 percent.

The Asia-Pacific is Ferragamo's largest market and Norsa said sales in China were growing at a double-digit percentage thanks to directly-owned shops in second- and third-tier cities, while in bigger ones problems such as high pollution discouraged shoppers.

Ferragamo's direct sales in Greater China jumped 15 percent in the second quarter.

Norsa said the group, which on Friday presented its latest women's fragrance, would keep investing in the beauty segment to target younger clients with a lower spending capacity and fast-growing middle-classes in emerging markets such as China.

(1 US dollar = 0.7795 euro)
 

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