Salvatore Ferragamo Stock Plummets 16% Amid Financial Struggles and Uncertain Future

Salvatore Ferragamo (BIT:SFER) shares plunged over 16% after its latest earnings report, highlighting ongoing challenges for the luxury brand. Despite efforts to control costs, the company continues to struggle with margin pressures, weak demand, and an uncertain outlook for 2025.

Fourth-quarter sales showed signs of stabilization, with revenue down 4% on a currency-adjusted basis. Direct-to-consumer sales grew a modest 1%, while wholesale remained stronger. However, sluggish performance in Asia, particularly China, remains a key concern. The company’s gross margin fell 200 basis points year-over-year to 70.8%, missing the 71.9% consensus estimate. Cost-cutting helped lift EBIT to €35 million, exceeding the €30 million guidance.

Full-year 2024 revenue is projected at €1.04 billion, down from €1.16 billion in 2023, reflecting the brand’s ongoing struggle to regain momentum. Ferragamo trades at 35 times its estimated 2027 EPS, well above the luxury sector average of 19 times, raising valuation concerns. Investor confidence has also been rattled by leadership uncertainty, with no successor named after Marco Gobbetti’s departure.

Ferragamo’s attempts to modernize its brand and marketing strategy have yet to drive meaningful financial gains. With younger consumers gravitating toward more innovative competitors, the company risks losing further ground. Weak sales in China, a crucial growth market for luxury brands, add to the pressure.

Previously up 11% year-to-date, outperforming the sector’s 9% gain, Ferragamo’s stock nosedived post-earnings as investor skepticism grows. While 2025 EBIT is forecasted to rise 18% to €41 million, doubts remain about the company’s turnaround strategy and long-term growth prospects.