Despite posting a 6% year-on-year gain in revenues, first half of 2014 net profit slipped 6% at Italian luxury fashion retailer, Salvatore Ferragamo S.p.A
Salvatore Ferragamo reported revenues of 659 million Euros, up 6% at current exchange rates, over 625 million Euros it clocked in the first half of 2013. The luxury fashion brand said sales growth at constant exchange rates was 8%.
However, net profit in the first six months of 2014, inclusive of minority interest of 4 million Euros, reached 82 million Euros, down 6% from a year ago period. But rose 10%, excluding the capital gain, derived from the disposal of the participation in ZeFer, Salvatore Ferragamo said.
Asia Pacific was the top revenue generator with a growth of 11% year-on-year, led by the retail channel in Greater China, which grew at an astounding 15% from a year ago in the second quarter of 2014.
Despite geopolitical tensions in Europe which negatively impacted global tourist flows, Salvatore Ferragamo said the region posted a sales hike of 9% in first half of 2014 over corresponding period of 2013.
North America, strongly impacted by the unfavourable weather conditions in the first part of the year, recorded a solid revenue growth of 12% in the second quarter of 2014, bringing the increase in first half of 2014 to over 7% from a year earlier.
Sales in the Japanese market increased 6% year-on-year in the first six months of 2014, despite falling 4% in the second quarter of 2014, penalized by the expected slowdown due to the consumer tax increase.
Revenues in the Central and South America marked a turnover jump of over 23% year-on-year in the first half of 2014, which Salvatore Ferragamo attributes to reorganization of the distribution network in the region.
In the period under review, gross profit increased by 5% year-on-year, reaching 414 million Euros and as a percentage of sales moved up from 62.8% to 63.1%, while operating costs grew by 4%, touching 293 million Euros and as a percentage of sales fell 44.5% from 45.2%.
Profit before taxes, over the period, moved down to 118 million Euros from 121 million Euros in the first half of 2013, inclusive of 13 million Euros capital gain derived from the disposal of the participation in ZeFer. Excluding the capital gain, profit before taxes increased 9%.
Net working capital rose 25% to 301 million Euros at the end of June 30, 2014, from 241 million Euros as on June 30, 2013 and inventory went up to 335 million Euros from 288 million Euros in the periods under review.
Capex at Salvatore Ferragamo reached 34 million Euros in first six months to June 30, 2014, up 35% from a year earlier, which it said is mainly attributable to opening new stores, enlargement and refurbishment of existing key locations and enhancing logistics and digital projects.
After a dividend distribution of 67 million Euros in May 2014, net financial debt as on June 30, 2014, touched 114 million Euros compared to 78 million Euros on June 30, 2013.
Fibre2fashion News Desk - India