MILAN – Weak traffic, particularly in Asia-Pacific, and a difficult wholesale scenario weighed on Ferragamo’s first-half performance but executive board member Ernesto Greco mapped out a detailed strategy during a conference call with analysts on Thursday, seeing some positive signs, such as an increase in conversion rates and a higher average ticket since the second quarter.

“We have undertaken a comprehensive diagnostic of our brand positioning and consumer base, with the objective of assuring full clarity and alignment across style, product, communication and distribution,” said Greco. “This has led to the identification of the key business priorities and the development of a focused action plan. We have already started implementing tangible changes, and are confident that these efforts will become increasingly effective by the end of this year, and then even more in 2026.”

Revenues in the first six months ended June 30 were down 9.4 percent to 474 million euros compared with 523 million euros in the same period last year. At constant exchange rates, they fell 7.1 percent. The performance was mainly penalized by the wholesale channel, which was down 17.9 percent to 105 million euros.

In the second quarter, revenues were down 14.6 percent to 253 million euros.

To improve the company’s performance, Greco said the focus will be on its core offering of shoes and leather goods “in classic and contemporary styles and less fashionable. Our goal is to deliver a global assortment, partially diversified by geography, to adapt to specific market needs, ensuring a stronger alignment with our target clients. This will be achieved through a more punctual and efficient collection structure, featuring higher depth, fewer skus — reducing them by 30 to 35 percent — and an optimized pricing architecture.”

Ferragamo increased its prices by 3.5 percent to 4 percent in the U.S. at the end of June, which “should absorb the tariffs” and the currency effects. “The problem is the mood of the consumer and traffic but, while we have seen less customers, the conversion rate is improving and there is more interest in the products,” said Greco.

Asked about the arrival of a new chief executive officer, following the exit of Marco Gobbetti in March, Greco said “the recruiting process is underway and ongoing.” He said the strategy presented during the call was mapped out “by a large group of professionals, internal management and external consultants.” He added that while the luxury industry “went up by 5 to 10 percent in the 2022-2025 period, Ferragamo lost 18 to 19 percent of revenues.”

Profitability was impacted in the first half, as earnings before interest, taxes, depreciation and amortization fell 38.1 percent to 73 million euros compared with 117 million euros.

Operating losses, adjusted before write-downs of assets and impairment tests, were 3 million euros compared with a profit of 28 million euros last year.

The adjusted net loss was 16 million euros compared with a profit of 6 million euros at June 30, 2024.

Ferragamo has been optimizing its store network, which now totals 357, and Greco said some closures are necessary, especially in China.  “Cost-effective actions such as touch-ups, attractive visual merchandising, and small changes in displays on top performing stores are indeed either showing a performance in line with the last year or even showing an average ticket up 5 percent in the second quarter, or a modest growth at a constant forex, both in  the second quarter and for all the first-half period,” said Greco.

Direct-to-consumer revenues decreased 6.5 percent to 357 million euros, accounting for 75.4 percent of the total. Positive results at constant exchange rates were reported in Europe and Latin America, only partly offsetting the negative performance in Asia-Pacific and Japan, said chief financial officer Pierre La Tour.

The second quarter saw a slight deterioration, decreasing 5.4 percent at constant exchange rates mainly due to the worsening performances in Europe and Japan, driven by lower tourists’ purchases, compensated by improving trends in North America, Latin America and Asia-Pacific, La Tour explained.

The wholesale channel in the second quarter fell 34.3 percent, mainly due to the challenging wholesale environment.

Greco said that the company has “lost some focus” on the travel retail channel and that it will “go back to spend some resources” in this distribution.

Ferragamo has seen improvements on the digital platform, up 12 percent. “We keep boosting our online presence by introducing new features to enhance the navigating experience, accelerate client acquisition, traffic and conversion and introduced advanced analytic,” Greco observed.

The Europe, Middle East and Africa region in the first half posted a sales decrease of 7.8 percent to 116.5 million euros, accounting for 25.2 percent of the total, with growth in DTC offset by declines in the wholesale business.

North America was down 3.9 percent to 141.3 million euros, accounting for 30.6 percent of the total, with DTC in line with last year at constant exchange rates, thanks to the positive performance of the primary channel.

Sales in Central and South America were down 3.5 percent to 36.3 million euros, but increased 11.6 percent at constant exchange rates, penalized by exchange rates trends.

Asia-Pacific was down 18.5 percent to 128.4 million euros, representing 27.8 percent of the total in sales challenged by the ongoing weak consumer environment significantly impacting traffic.

Japan was down 3.5 percent to 40 million euros due to the deteriorating trend in the second quarter, a decrease of 12.6 percent at constant exchange rates, mainly because of the harder comparison base versus last year and lower Chinese tourist purchases.

By category, sales of footwear were down 15.5 percent to 201.8 million euros, accounting for 43.6 percent of the total.

Leather goods decreased 2.2. percent to 199.1 million euros, representing 43.1 percent of the total.

Apparel fell 10.5 percent to 27.2 million euros, or 5.9 percent of the total.

Silk and other categories were down 7.7 percent to 34.3 million euros.

As of June 30, capital expenditure amounted to 16 million euros compared with 21 million euros in the first half last year, mainly channeled into the renovation of the retail network.

Last year, investments totaled 87 million euros and Greco estimates this year they will amount to 83 million or 84 million euros, but he said that they will be channeled in a different way, “less with influencers, less in fashion shows, and more in digital, stores and clienteling initiatives.”

The net financial position was positive for 119 million euros compared with 167 million euros at June 30, 2024.