Salvatore Ferragamo (1K) | Hold | Slight Q1 miss

Research evidence excerpt

Salvatore Ferragamo (1K) | Hold | Slight Q1 miss

significant

Catalysts operating leverage.

n Persisting headwinds in APAC and the wholesale channel. n The group could become a takeover target given its strong

n Reception of Maximilian Davis' upcoming new collections. heritage and fragmented family shareholding structure, albeit

still concentrated within a holding company.n Buyout of minority shareholders by the Ferragamo family.

n The net cash position is gradually eroding, though it remains

at a healthy level. Time is running short to restore a positive

trajectory in sales, earnings, and FCF.

Key data charts

FCF Sales split by region Sales split by division

250.0 10.0% Europe

200.0 8.0% 3.3% Retail 2%2%

6.0% North America 24.1% 20% 150.0 4.0% 25.2%

100.0 2.0% Latam Wholesale

50.0 0.0% Japan

-2.0% 8.0% 0.0

Licenses & -4.0% Asia Pacific 77% 8.2% 31.2% -50.0 Services -6.0%

-100.0 -8.0% Other

21 22 23 24 25 26E 27E 28E Others

Att. FCF (m) (LHS) Att. FCF Yield

SWOT analysis

Strengths Weaknesses

n Healthy financial structure. n Small average store size and outsourced production.

n Entirely made in Italy. n Lower price positioning in some segments.

n Widespread retail network. n Declining sales density in recent years.

n Iconic brand in footwear and leather goods. n Weak margins compared to peers.

Opportunities Threats

n Potential for better price/mix given brand recognition. n Low visibility on the turnaround after multiple management change.

n Boosting sales density through retail excellence projects. n Potentially oversized retail network given the brand's size.

n Benefits to working capital from new logistics centre. n Loss of appeal in some markets.

n New CEO joined at end-2021. n Strong competition from larger brands.