Salvatore Ferragamo shares fell sharply on Wednesday in Milan, suffering from Bernstein comments, which began to monitor the stock with an "underperform" rating and a target price of €3.4, nearly a third below its current price.
At noon the stock was down 0.1% at exactly €5, compared with a 0.5% gain for the FTSE MIB at the same time.
Bernstein said that a worrying gap is widening between the Italian luxury house's rich heritage and what it offers today in terms of products and communication, resulting in a deterioration of the brand's image.
Not only is the company struggling to capitalize on its prestigious past, but it is also failing to adapt to a world where fashion has become more informal, notes Bernstein, which laments the brand's inconsistent collections, a muddled mix of old and new, good and not so good, and sometimes overly abundant.
Worse still, the brand is sliding towards a form of commoditization, as evidenced by the low profitability of its unprofitable stores (with average sales of only €2.8m per store) and excessively high inventories, which account for 30% of sales, the broker concludes.
Salvatore Ferragamo SpA is an Italy-based company engaged in fashion industry. The Company mainly creates, develops and produces textiles goods and shoes. The Company’s products categories are responsible for the manufacture and sale of footwear, leather goods, clothing and accessories for men and women. The Company’s products include also fragrances and eyewear under the Salvatore Ferragamo brand and on license Ungaro brand. The Company’s products are distributed mainly through network brand stores, managed both directly and by third parties, as well as department stores and multibrand specialty stores. The Company’s activities also include the licensing of the Ferragamo brand, rental services, property management and technical consultancy with the Zegna Group. Salvatore Ferragamo SpA operates in Europe, North America, Japan, Asia-Pacific and Central and South America.
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