Ferragamo Sees 12 Percent Revenue Jump in China in First Half 2017

Revenue Generated from Mainland China
Salvatore Ferragamo, the Italian luxury goods brand, reported that revenue generated from mainland China in the first six months of 2017 (ending in June) grew by 12.2 percent year-over-year.

The robust demand from Chinese consumers has also helped offset the sluggish retail performance in markets like South Korea and Hong Kong, securing the Asia Pacific region, which saw an increase of 6.1 percent, as the leading source of revenue growth for the Salvatore Ferragamo Group.

Globally, the Group reported a 1.1 percent increase in total revenue by the end of June for a total of 718 million euros (nearly $849 million). However, its net profit dropped 15.4 percent to 76 million euros from 90 million euros the year before.

In China, the brand currently has a physical presence in 35 cities. (Globally, it operates 680 mono-brand stores and employs roughly 4,000 people.)

Bid to Win Over the Young Chinese
In a recent bid to win over younger generations, Ferragamo collaborated with Xiao Wen Ju, a Victoria’s Secret supermodel, to leverage her massive popularity.

Performance Patchy in Devleoped Markets
The Central and South American region, where the Group posted positive growth by 7.2 percent, is another one of the biggest markets for the brand. The developed markets, on the contrary, all recorded a revenue decrease during the same period, with Europe, North America and Japan falling by 2.4 percent, 2.2 percent and 3.4 percent, respectively.

Leading Products Globally
Famous for its ballerina flats, the company’s footwear products have continued to be the driving force, contributing 43.6 percent to the total revenues. Leather goods (36.9 percent) and apparel (5.8 percent) are the next two categories that bring in revenues.

“The current year is confirmed to be a transition period for the Salvatore Ferragamo Group, during which strategic initiatives in the major company’s areas are going to be implemented,” the company said in a statement. “The resulting benefits are expected to materialize over a longer period of time.”

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Earnings Brief, Market Trends, Retail