The Growth Of Luxury Goods Industry Will Continue To Slow Down. It Is Not Clear Where The Bottom Is.

As China's economic growth slows, oil price slump, exchange rate fluctuations and terrorist threats have led to slower growth in tourist flow, which also limits sales growth of high-end luxury handbags, shoes and other accessories.

In the past few years, Italy's luxury brand SaLVatore Ferragamo, like other luxury brands, is also facing complex environmental performance in the Chinese market and has begun to slide into a downturn.

CEO Michele Norsa thinks

Industry growth will continue to slow down, it is not clear where the bottom is, and sales revenue growth is also hard to predict.

SaLVatore Ferragamo has more than doubled its share price since its listing five years ago, but its share price has fallen by nearly 10% this year.

In May, SaLVatore Ferragamo's first quarter report showed a 5% rise in core profits, higher than expected, but revenues fell 2% to 321 million euros.

During the men's week in Milan, CEO Michele Norsa said the luxury industry must now focus on risk management. He stressed that luxury growth will not be as strong as in the past few years, and that the days of rapid growth in China's economy and growth in emerging markets will be gone forever.

According to Bain Capital's latest forecast, this year's overall luxury industry growth is the second lowest rate since 2009, the growth rate is between 2% and 3%, LVMH group leather goods.

Business growth stagnated in the first quarter of 2016, while Burberry group's first quarter revenue fell 5%.

According to Reuters, Michele Norsa, who is leaving CEO, points out that

This year, we will focus on increasing profits to cope with the overall low growth of the luxury goods industry.

Michele Norsa has been in charge of the group for ten years, and successfully led the SaLVatore Ferragamo to the stock market in 2011. At the end of this year, he will leave the company. The handbag manufacturer Furla CEO Eraldo Poletto will take over his position.

SaLVatore Ferragamo's poor performance in the Asia Pacific region in the latest quarter, especially in the two main markets of mainland China and Hongkong, usually accounts for 36% of the group's performance, but its revenue has shrunk by 3%, and has fallen 2.3% at a constant exchange rate.

In the same period last year, the Asia Pacific region's total revenue rose 11%, of which China's retail channel also recorded a 22% increase.

Obviously, consumer demand for SaLVatore Ferragamo is decreasing.