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Investing.com -- Salvatore Ferragamo (BIT:SFER) shares on Friday surged over 10% after reporting fourth-quarter 2024 sales that came in largely in line with expectations, making it the first luxury brand this earnings season to miss consensus topline estimates.
The Italian luxury group posted revenue of €291 million for the quarter, reflecting a 4% year-on-year decline at constant exchange rates. The result was only marginally better than market forecasts of €290 million and a projected 4.9% drop.
Ferragamo shares traded 10.2% higher at 8.02 euros on Friday.
Ferragamo’s sales continue to decline overall, indicating ongoing challenges. However, there was a small improvement compared to the last quarter, which saw a 7.2% drop.
The company’s direct-to-consumer business, a key driver of growth, showed a modest turnaround, rising 0.9% year-on-year in Q4 after a 5.7% decline in Q3.
Strength in Europe, North America, Japan, and Latin America helped offset ongoing weakness in the Asia-Pacific region.
Within the DTC segment, the company’s primary retail channel saw a 3% rise, fueled by strong sales in handbags and footwear, while its secondary retail business remained under pressure.
The wholesale division, however, continued to struggle, with sales falling 19.3% in the quarter, a sharper decline than the 12.8% drop seen in Q3.
Weak demand in Asian markets, as well as sluggish travel retail, weighed on performance. Additionally, Ferragamo cited differences in delivery timing compared to the previous year as a contributing factor.
“We expect very limited changes to consensus numbers off the back of tonight’s in-line sales,” said analysts at Morgan Stanley (NYSE:MS) in a note.
Regionally, Europe posted a 4.5% increase in sales for the quarter, improving from the 1.2% growth recorded in Q3.
The North American market also rebounded, growing 6.3% after a steep 7.9% decline in the prior quarter.
Latin America delivered the strongest regional performance, with sales rising 10.7% year-on-year, supported by strong demand for shoes, handbags, and leather goods.
In contrast, Asia-Pacific continued to lag, with sales tumbling 24.8%, marking a further slowdown from Q3’s 20.5% decline.
While the company noted a slight sequential improvement in the DTC business in the region, it described market conditions as volatile.
Meanwhile, Japan saw a modest 1.2% increase, though growth in the region slowed compared to the previous quarter.
Ferragamo reported a positive start to 2025, with increased direct-to-consumer sales in January.
However, Morgan Stanley analysts remain cautious, observing that while new collections are well-received, there’s no clear sign of significant brand momentum.
“Our recent luxury channel checks (Jan 2025) pointed to a continued lack of brand momentum at Ferragamo, despite admirable collections, with anecdotal feedback describing a marketing push that a number of contacts felt missed the mark; this suggests potential for a turnaround should the company succeed with marketing and social media,” Morgan Stanley added.