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Ferragamo's 9M sales down 6.6%; Asia drags, margin risk prompts reset

Bottom Line Impact

Absent swift SKU and cost resets, revenue will likely remain flat to down low single digits with 100-200 bps margin pressure, risking share loss in core leather goods; decisive focus on icons and DTC productivity can stabilize growth and protect brand equity within 2-3 quarters.

Key Roles Affected

CEOCFOCMOCOO

Executive Summary

Nine-month sales fell 6.6% to €695m as Asia Pacific declined 17.9% and wholesale underperformed, pressuring near-term margins. A modest Q3 uptick at constant FX and a higher average ticket suggest brand pricing power, but a decisive shift to core footwear and leather goods and cost discipline is required to stabilize performance within 2-3 quarters.

Actionable Insights

Immediate Actions (Next 30-90 days)
Commit to a portfolio simplification program cutting 20-30% of SKUs in non-core ready-to-wear and fringe accessories by SS25, reallocating capacity to top 50 SKUs in footwear and leather goods.
Rationale: SKU rationalization can improve gross margin by 80-120 bps and raise full-price sell-through by 5-8 pts while reducing working capital tied up in long-tail inventory.
Role affected:CEO
Urgency level:immediate
Shift 15-20% of brand and performance marketing spend from APAC to Americas and EMEA, anchoring campaigns on signature leather and shoe icons; deploy targeted clienteling to top 10% of DTC clients.
Rationale: Rebalancing spend toward resilient regions can lift DTC traffic 3-5% and conversion 50-100 bps, protecting full-price mix during Asia softness.
Role affected:CMO
Urgency level:immediate
Short-term Actions (6-12 months)
Execute a €25-35m cost takeout over 12 months by optimizing store labor, renegotiating leases in underperforming APAC locations, and consolidating wholesale doors by 10-15% in the region.
Rationale: A 3-4% OPEX reduction could add 120-180 bps to EBIT margin and neutralize mix pressure from Asia while preserving investment capacity in Americas and EMEA.
Role affected:CFO
Urgency level:short-term
Reduce weeks-of-supply by 2-3 weeks in APAC via controlled buys and outlet liquidation caps; implement nearshoring for replenishment SKUs to cut lead times by 20-30%.
Rationale: Lower WOS and faster replenishment decrease markdown risk by 100-150 bps and align inventory with volatile demand.
Role affected:COO
Urgency level:short-term

Strategic Analysis

Next 30-90 days will see margin pressure from negative mix and Asia traffic softness; expect 50-150 bps gross margin compression absent rapid markdown control and wholesale orderbook pruning for SS25.

Over 6-12 months, concentrating on footwear and leather goods with tighter SKU breadth can lift full-price sell-through by 5-8 pts and improve EBIT margin by 100-200 bps if OPEX is reduced and wholesale exposure in underperforming APAC is rightsized.

Mid-tier luxury peers are rationalizing wholesale and sharpening hero product focus; brands with stronger leather goods equities are gaining share in the Americas and EMEA while China softens. Without a faster reset, Ferragamo risks ceding consideration to Prada, Saint Laurent, and Gucci in core leather goods price bands.

Suppliers face lower MOQs and longer lead-time buffers as assortments narrow; wholesale partners may see door closures and tighter allocations; retail teams will pivot to clienteling and category storytelling; customers should expect fewer SKUs, higher AUR, and more emphasis on iconic footwear and leather lines.

Risks & Opportunities

Primary Risks

  • Prolonged APAC demand slump leading to further negative mix and markdowns
  • Channel conflict from wholesale cuts impacting short-term sell-in and brand reach
  • FX volatility eroding reported growth despite constant currency improvements

Primary Opportunities

  • Elevating core footwear and leather goods to regain pricing power and mix
  • Americas and EMEA resilience enabling DTC-led growth with higher gross margins
  • Assortment and OPEX reset to structurally improve EBIT margin by 100-200 bps

Market Context

Luxury demand is normalizing after post-pandemic peaks, with China and broader APAC slowing amid macro and geopolitics while Americas and parts of Europe remain steadier. Category leaders are doubling down on leather goods and iconic franchises, tightening wholesale, and prioritizing DTC profitability. Compared to peers that moved earlier on wholesale resets and hero product focus, Ferragamo is mid-transition, heightening execution risk but also offering a near-term turnaround window if mix, pricing, and costs are disciplined.

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