More economic impacts of the coronavirus crisis on luxury brands are being quantified.
Salvatore Ferragamo SpA on Monday reported a 30.6% drop in preliminary revenues in the first quarter. In the three months ended March 31, sales dropped to 220 million euros ($239 million) compared with 347 million euros ($377.3 million) in the same period last year.
The Florence-based group said it had posted “a solid performance” in January in all its main markets, but these “increasingly deteriorated” in February and March, first in China and Asia and progressively in Europe, America and the rest of the world, in light of the rapid diffusion of the COVID-19 pandemic. Last month, the company’s management said it expected an impact in the first quarter.
The reduction in store traffic, the lockdown imposed in several countries, and the progressive closure of the majority of the brand’s stores in February and March heavily impacted the retail channel’s performance, which in the first quarter was down 28.6%.
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Sales in the wholesale channel fell 33.7%, also penalized by the cancellation of orders, mainly in the travel-retail channel. This was further hurt by the comparison with the first quarter last year that had benefited from the recouped shipments from the last quarter in 2018.
Given the “significant change in the global economic scenario” that followed the company’s board meeting on March 10, the company on Monday revoked the proposal of the payment of a dividend “in order to support the group’s financial strength and contain future economic and financial impacts,” proposing to allocate the profit last year equal to more than 124.2 million euros to extraordinary reserve.
Ferragamo has also established an executive committee to face the emergency caused by the COVID-19 pandemic comprising chairman Ferruccio Ferragamo, CEO Micaela Le Divelec Lemmi and directors Francesco Caretti, Diego di San Giuliano and Marzio Saà. The committee has been granted “the powers to monitor, supervise and support the implementation of initiatives to face the emergency” caused by the pandemic.
The company postponed its April 21 ordinary shareholders’ meeting to May 8 by delegation to a designated representative.
As reported, in the 12 months ended Dec. 31, Ferragamo’s net profit, excluding the IFRS 162 accounting standard, was up 1.7% to 92 million euros, compared with 90 million euros in the previous year.
Revenues rose 2.3% to 1.37 billion euros, compared with 1.34 billion euros in 2018.
Last month, commenting on year-end figures, Le Divelec Lemmi said: “The evolving nature and uncertainties of the duration of the virus make it impossible to [provide forecasts] for 2020. There will be an impact on 2020, and we are putting measures to mitigate the effects, and to strengthen our long-term strategies, reevaluating orders, monitoring costs that are not strategic and renegotiating contracts.”
This story was reported by WWD and originally appeared on WWD.com.
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