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Salvatore Ferragamo Shares Rise After Improvements in Q3

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MILAN — Salvatore Ferragamo shares closed up 4.38 percent to 14.06 euros on the Milan Bourse on Wednesday as the company’s results in the nine months and third quarter revealed a day earlier beat analysts’ expectations. Shares had risen 6.24 percent in mid-afternoon.

Jefferies analysts praised Ferragamo’s cost-cutting strategies as operating profits beat expectations by 4 million euros.

“We maintain our view that Ferragamo has a strong heritage and that another quarter of business rationalization will contribute to its appeal as a target,” stated Jefferies in a report, reiterating that “a change in the control of the company is probable,” and that “a more streamlined business, with an optimized structure of costs can be attractive for a buyer.”

The Florence-based company has been at the center of rumors about a possible sale for years now, although the heirs of the namesake founder have repeatedly denied this option. Ferragamo Finanziaria holding controls the company with a 54.3 percent stake. Hong Kong tycoon Peter Woo’s MHL owns 6 percent and Ferragamo family members have a further 10.7 percent. Given the complicated web of family heirs, sources here have for years speculated about a possible divestiture by some of them and their desire to cash out.

Equita Sim and Banca Akros also said Ferragamo’s third-quarter results were better than expected.

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“Ferragamo has shown a good restart and the fourth quarter should be led by Asia, while North America could be more uncertain,” stated Banca Akros. “We expect Europe to weigh on the fourth quarter.”

Equita noted that the month of October “progressively improved on Continental China, Japan, Taiwan, North America but not Europe, where visibility is further reduced by the restrictions currently put in place.”

Equita noted that the main message from the results was Ferragamo’s positive “cost cutting, while we don’t see yet company-specific signals on revenues that will provide evidence of the relaunch of the brand.”

The firm also pointed out that shares were benefiting from potential M&A scenarios and an increasingly faster recovery of sales and margins.

As reported, Ferragamo saw signs of a recovery in the third quarter, lifted by retail gains in China. But these weren’t enough to offset the performance overall in the first nine months of the year.

In the nine months ended Sept. 30, the Florence-based company reported a net loss, including a minority interest, of 96 million euros, compared with profits of 61 million euros in the first nine months of 2019. Revenues were down 38.5 percent to 611 million euros, compared with 994 million euros in the same period last year. The third quarter showed a progressive improvement, with revenues in the period decreasing by 18.9 percent.


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