Luxury goods house Salvatore Ferragamo has seen a strong lift in its share price following a good half-year sales performance – with duty free and travel retail cited as a major driving force.

 

The share price rose by +8.8% to €22.42 on Friday on the back of +8% sales growth (constant exchange rates) to €659m ($846.6m) in the first half to June, led by DF&TR and wholesale at +12%. The shares had slipped back slightly in this morning’s trading to €22.18.

 

The Italian company saw leathergoods and handbags – the core product group in travel retail – grow fastest at +15.5% to €234.6m, well ahead of the second fastest growth category of shoes (+5.7%). The two categories combined account for 78.4% of total revenue (see chart below and click to enlarge).

 

EUROPE OVERPERFORMS, ASIA WEAKEST

Unusually, Europe was the strongest growth region for the Florence-based house. It grew by +8.7% and generated revenue of €181.7m.

 

Asia Pacific, the biggest region for sales was the slowest grower at +5.6% to €248.9m (see chart below and click to enlarge).

 

On the strength of Europe, Ferragamo comments that this was “thanks to wholesale and travel retail”. Retail, the company says, was “penalised by geopolitical tension, tourist flows and negative perimeter”.

 

In general, the company comments: “Travel Retail is still the best opportunity for perimeter growth in all major business locations, particularly in Asia and the Middle East.”

 

 

Despite the good sales growth, with Ebitda increasing by +8.8% to €143m, group net income declined by -3.5% to €78.1m, although this would be a +14% increase excluding the capital gain deriving from the disposal of its share of ZeFer [the 50/50 joint venture for development of the Ermenegildo Zegna brand in the footwear and leather sector created in 2002].

 

Ferragamo warns that in the H1 period major companies had reported weaker tourism spending in the second quarter and that “Chinese domestic consumption is still mixed (while) Hong Kong data is weakening with lower average spending from travellers”.

 

[Pictured top is the Ferragamo store at Shenzhen Airport.]