Rain of purchases on Ferragamo after accounts, market appreciates higher-than-expected ebit

(Il Sole 24 Ore Radiocor) - Ferragamo is up sharply at Piazza Affari (FTSE MIB), in the aftermath of the release of its accounts. Last year, the fashion company still posted a loss, amounting to EUR 49 million, but the red was reduced, mainly due to strict cost control by the management, much appreciated by financial experts. Moreover, net of the negative effect of the Impairment Test for both 2024 and 2025, the result was a loss of EUR 3 million, compared to a profit of EUR 16 million in 2024. Revenues were confirmed at EUR 977m (-5.7% and -3.8% at constant exchange rates). The company also enjoyed a positive net financial position of EUR 144m (compared to EUR 119m as at 30 June 2025 and EUR 173m as at 31 December 2024).

"FY2025 results were mixed: gross margin stood at 68.1%, just below consensus at 68.2%, while ebitda was +2.3% above consensus, coming in at 165.7m (vs 162m). The negative ebit of EUR 21.4 million was just above the consensus of EUR 22.7 million. Net profit was lower than consensus at EUR49.2 million (-12.6%)," Bernstein commented, pointing out that the consensus figures were likely confounded by the company's EUR46 million (-45.3% year-on-year) impairment charge resulting from the Impairment Test, mainly related to its operations in China and Korea.

The conference call revealed the company's strategy to optimise its retail network: thus planned are 70 selective shop closures over the next two years. In addition, it was indicated that the company will focus on footwear, leather goods, and profitable businesses, while it will begin to divest categories that do not bring in earnings. Thus, Bernstein notes, 'it could post a sequential improvement in profitability, assuming the geopolitical environment does not worsen'. The war in the Middle East was also discussed during the conference call, and the company was keen to emphasise that it is not present in the region with its own shops, but only through wholesale. In addition the region has a marginal weight of only 1.5% of the total sales last year. Obviously, it was emphasised during the call, if the conflict lasts for a long time, Ferragampo will also have to deal with indirect effects such as rising inflation and a decrease in consumer spending propensity.

For now, no updates on management have been provided. "We believe that the imminent appointment of a ceo is likely to boost optimism around the brand, in anticipation of a coherent (and successful) turnaround strategy," still commented the analysts of the business house, who in any case continue to recommend caution on Ferragamo's shares, i.e. an 'Underperform' with a price target of €4.4.

Barclays also issued an 'Underperform' with a price target of EUR 4.9, while appreciating that the company's top management hinted that ebit could continue to improve in the current year, thanks to severe cost control. An indication which, however, came up against the dreaded possibility that sales in the company's own shops might slow down. In addition, 'the fact that the chief executive search process is still ongoing could add to market concerns', concluded the overseas bank's experts.