Aug 30, 2012
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Ferragamo sees 2012 growth despite Chinese shadows

Aug 30, 2012

Up-market Italian shoemaker Salvatore Ferragamo expects "significant" sales growth in 2012 despite weaker consumption in part of China, confirming the strength of global luxury players despite financial turmoil.

Autumn-winter 2012 ad campaign / Photo: Salvatore Ferragamo

The maker of shoes worn by Hollywood stars such as Angelina Jolie and pop queen Lady Gaga said it expected profitability to improve in the second half of the year after first-half net profits rose 22.5 percent to 55.9 million euros ($70.03 million).

Analysts had expected Ferragamo to report continued growth, driven by wealthy Asian travellers shopping in Europe and the group's wide retail presence in China.

"We have been under influence of European debt situation and the euro evolution, which keeps generating certain difficulties and changed consumers behavior," Chief Executive Michele Norsa said during a conference call after the results.

"In this environment the luxury industry is proving to be very resilient," he said, citing strong demand from Asian travellers across Europe and North America.

European sales - accounting for nearly 26 percent of revenues - grew 25.2 percent in the second quarter despite weaker domestic consumption in recession-hit countries.

Rivals such as LVMH and PPR dismissed concerns over an impact of softer growth in China when they reported strong second-quarter results last month.

Norsa said he had seen a "quite surprisingly positive performance in Europe" in August, again driven by tourists.

He said total sales in July were "still very good", after rising 22.9 percent to 565.1 million euros in the first half.

However, Norsa said he expected sales in some areas of China - the fastest-growing luxury market - to slow down between now and November as local consumers continue to spend abroad because of favourable prices and exhange rates.

The Florence-based family firm said core earnings (EBITDA) would further improve in the second half after rising 18 percent to 66.6 million euros in the second quarter.

Pre-tax profit rose 37.7 percent to 88.3 million euros.

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