Ferragamo shares fall after Q2 miss, operating loss triggers strategy review

Investing.com -- Salvatore Ferragamo (BIT:SFER) shares dropped more than 2% Friday after the luxury fashion group reported second-quarter results below expectations and posted an unexpected operating loss, prompting a strategic review.

Revenue for the second quarter fell 12% year over year on an organic basis to €253 million, 5% below the consensus estimate of €266 million. 

First-half revenue declined 9% to €474 million, missing consensus by 3%. Adjusted EBIT for the half-year was a loss of €2.9 million, versus expectations for a €10 million profit. 

Reported EBIT came in at a loss of €44 million, weighed down by higher operating expenses and a €41 million impairment charge.

Gross margin for the first half fell 440 basis points to 67.7%, impacted by inventory write-downs related to older collections and adverse foreign exchange effects. 

The company said 250 basis points of the decline were due to the write-downs, while the remaining 190 basis points were linked to currency movements.

Sales fell across all key regions. In constant currency, Asia Pacific dropped 16%, Europe declined 9%, Japan fell 5% and North America edged down 1%. 

Central and South America was the only region to post growth, rising 12%. By channel, wholesale revenue declined 14% and retail dropped 5%, both on a constant-currency basis.

Ferragamo has begun a strategic review, led by internal teams and external consultants. 

The company plans to refocus on leather goods and footwear, streamline its product assortment and revamp its marketing and communications strategy. New products are expected to launch with the Spring/Summer 2026 collection.

Store count stood at 357 as of June, 16 fewer than a year earlier. The company said further closures are planned, particularly in China. 

Digital sales rose 12% in July after a reorganization of the e-commerce division. The company also reported a double-digit sales increase in accessories following visual merchandising changes in stores.

In the U.S., Ferragamo raised prices by 3.5% in June and is planning another 4% increase to offset currency impacts and tariffs. 

The company said it expects to maintain full-year capital expenditures at €60 million. Marketing and communication expenses are forecast at €83 million to €84 million, compared with €87 million in 2024.

For the full year, Ferragamo expects a mid-single-digit decline in constant currency revenue. 

July direct-to-consumer trends were described as flat but improved from June. Wholesale conditions are expected to remain challenging through the second half.