Italian luxury goods group Ferragamo has reported a rebound in sales for 2021, driven by strong demand in China and increased e-commerce activity. This comes as a relief for the company, which experienced its first full-year operating loss in a decade due to the impact of the pandemic. Michele Norsa, the Deputy Executive Chairman, expressed confidence in China’s continued growth, predicting double-digit percentage increases in sales. China is Ferragamo’s largest market, accounting for more than half of its group revenues.

In 2020, Ferragamo saw a significant decline in sales, with a 33% decrease in revenue. This was one of the worst performances in an industry hit hard by shop closures and a decline in tourism. However, the company has seen a positive trend in its retail network during the first nine weeks of 2021, with strong performances in China and Korea. Digital sales have also been booming, showing an impressive 86% increase.

Despite these positive signs, Ferragamo reported an earnings before interests and taxes (EBIT) loss of €62 million ($74 million) in 2020, compared to a profit of €150 million in the previous year. This was partly due to impairment charges on assets such as property and machinery. Analysts had expected an EBIT loss of €64 million for 2020, indicating that the company’s performance was not as dire as anticipated.

The pandemic has presented challenges for Chief Executive Micaela Le Divelec, who is facing the expiration of her term in April. Revamping the Ferragamo brand has been a difficult task in the current circumstances. There has been speculation about potential management changes, but the situation remains uncertain. Norsa did not provide any details on possible changes but mentioned that a “normal process” was underway in preparation for the annual meeting to appoint a new board of directors.

Overall, Ferragamo’s sales rebound in China and the growth of e-commerce are positive signs for the company’s recovery. However, it still faces challenges in restoring profitability and adapting to the changing consumer landscape. The upcoming management changes also add an element of uncertainty to its future direction.

Useful links:
1. Source: Reuters – Ferragamo sees continued sales growth in China for 2021
2. Source: The Wall Street Journal – Ferragamo Expects China Sales to Drive Recovery