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The value of the day in Europe – Salvatore Ferragamo: the awakening of the sleeping beauty?

(AOF) – Salvatore Ferragamo gained more than 9% to 14.72 euros, supported by quarterly results above expectations and the presentation of an ambitious five-year strategic plan. The new CEO Marco Gobbetti, former boss of Burberry, intends to finally bring the iconic Italian brand back into the modernity defined by the desires of “millennials”. The stakes are high. In recent years, Ferragamo has significantly underperformed a booming luxury sector, both in terms of sales, profits and… stock market prices.

In the first quarter of 2022, Salvatore Ferragamo returned to the green. The Florentine brand made a net profit of 14 million euros, against a loss of 0.6 million at March 31, 2021. Ebit reached 24 million against 7 million a year earlier, exceeding Kepler Cheuvreux’s expectations. which counted on 8 million. Ebitda increased by 4.4% to 66 million for a turnover of 289 million, up 20.6% at constant exchange rates, 7% above the consensus.

But the essential is elsewhere, recalls Citi in a note. The highlight of this publication and the conference call that followed is the five-year strategic plan presented by Marco Gobbetti.

The broker retains several key points. First point: more creative product content led by designer Maximilian Davis, with a more contemporary and relaxed take on Ferragamo’s heritage to appeal to a younger clientele.

Second point: distribution, better retail execution, new store concept, adjustment of wholesale distribution and omnichannel integration.

Third point: more product-centric communication, coherent storytelling and social media.

The broker points out that management’s financial targets include a doubling of the revenue base by 2021 (implying an annual sales growth rate of +15% over 5 years, mainly thanks to the price / product mix ratio and volumes , with an acceleration of growth from 2023) and a significant expansion of the Ebit margin, which could reach the peak of the margins of the years 2014-2016, i.e. 18%, by the year 2026. This figure is well above the consensus.

Equities have underperformed year-to-date and over the past five years as multiple recovery attempts failed. Citi thinks it might be different this time around.

In the meantime, the American bank has maintained its recommendation to Hold and its target price of 20 euros.

Jefferies confirmed its Hold recommendation and its target price of 15.5 euros on Salvatore Ferragamo. While welcoming the ambitions of the new leader, the broker believes that Marco Gobbetti has left many key questions unanswered, such as key recruitments, the structure of the creative team and the timing of the brand investment plan. .

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