Source: Company reports/Fung Global Retail & Technology

1H16 RESULTS

Milan-listed luxury leather goods brand Salvatore Ferragamo reported that 1H16 revenues decreased by 1.7%, and by 3.1% in constant currency, to €710 million, versus the consensus estimate of €712million. The gross profit margin expanded by 120 basis points year over year in 1H16, to 67%, supporting operating margin expansion of 30 basis points, to 19.1%. The company did not report earnings per share.

REVENUE PERFORMANCE BY GEOGRAPHICAL AREA

• Asia-Pacific revenues decreased by 3.8% and by 4.4% at constant exchange rates, mainly due to declines in Hong Kong.
• Europe revenues decreased by 3.3% and by 3.1% on a constant-currency basis, hit by lower tourist flows due to terrorism.
• North America revenues increased by 1.8%, but decreased by 2.6% at constant exchange rates. Although the strong US dollar negatively impacted tourist flows, retail business revenues increased by 6%. Wholesale business revenues decreased by 4% due to a challenging 1H15 comparison of 24%.
• Japan revenues increased by 1.7%, but declined by 5.2% at constant exchange rates, following lower Chinese tourist flows due to the yen’s appreciation versus the renminbi.
• Central and South America revenues increased by 0.8% and jumped 12.0% at constant exchange rates.

REVENUE PERFORMANCE BY SEGMENT

• Retail revenues declined by 1.9% and by 3.1% at constant exchange rates.
• Wholesale revenues declined by 1.4% and by 3.0% at constant exchange rates.

GUIDANCE

The company offered no guidance. For FY16, analysts expect revenues to increase slightly, by 1.0%, to €1.44 billion. They expect operating profit to increase by 3.9%, to €275 million, and EPS to grow by 7.8%, to €1.10.