Ferragamo Q3 Revenue Falls 6.2% as Wholesale Cuts Bite, DTC Grows

Ferragamo posted a 6.2 percent revenue decline in the third quarter, to 207 million euros, as deliberate wholesale rationalization and deteriorating demand in China outweighed growth in the direct-to-consumer channel in Europe and North America. At constant exchange rates, the third-quarter decrease narrowed to 3.5 percent.

Executive board member Ernesto Greco told analysts on Tuesday's conference call: "The market backdrop remained particularly challenging during the third quarter, impacted by ongoing geopolitical tensions and a generally subdued consumer environment over the summer, with weaker sentiment slowing the positive momentum across several key markets and further deteriorating the trend in Asia, in particular in China."

For the nine months ended Sept. 30, revenues fell 2.8 percent to 675 million euros, from 695 million euros a year earlier. The Milan-based group attributed the contraction to its ongoing strategic rationalization of the wholesale channel, a program now in what Greco called an advanced phase.

How is the channel mix shifting?

The DTC channel grew 1.9 percent to 537 million euros in the first nine months, up 4 percent at constant exchange. In the third quarter alone, DTC rose 2.3 percent, supported by full-price sales in primary retail.

Wholesale tells the opposite story. Nine-month wholesale revenues fell 15 percent to 123 million euros, from 145 million euros. In the third quarter, the channel dropped 24.2 percent, reflecting what the group described as its focus on enhancing the quality of distribution.

Greco set a timeline for the reset. The wholesale streamlining will likely produce "a probable still negative comparison in the first half of 2027," he said, while in the second half of next year, "we will see a stabilization and hopefully an increase realized in reputable points of sale."

He framed wholesale as a channel to manage, not marginalize: it "should not be a sort of ancillary channel, but of course it should be handled in a proper manner." A healthier wholesale network, he argued, would also help the brand penetrate the Middle East, which currently accounts for only 1.3 to 1.5 percent of sales and offers "a very interesting opportunity."

By month, retail was quite negative in July at constant exchange, "flattish" in August, then picked up in September and October, according to Greco.

What is happening by region?

North America was the standout: revenues rose 7.3 percent to 222 million euros, or 33.6 percent of the total. Central and South America gained 11.2 percent to 59 million euros, a market Greco called "very interesting" and one the group is analyzing for possible expansion.

Europe declined 8.6 percent to 161.7 million euros, representing 24.6 percent of total revenues, though at constant exchange — excluding China and Japan — all markets performed positively. Japan fell 12 percent to 50.4 million euros, down 2.2 percent at constant rates. Asia-Pacific dropped 6.1 percent to 166.6 million euros, 25.2 percent of the total.

On China, Greco was blunt: "The real problem, and to be honest, we can't understand if this is just a temporary slowdown or not."

He noted that the consensus assumption of a Chinese market recovery in the second part of 2026 is not materializing as far as Ferragamo can see, with only specific players achieving positive momentum there.

Within China, the weakness concentrates in so-called affluent customers, while "diamond" — ultra-wealthy — customers remain quite resilient. Ferragamo is serving that top tier through special services, including invitations to Florence and dedicated treatment in China, and reports positive feedback. Greco's conclusion extends beyond the house: recovery in China will pass mainly through attracting wealthy customers, while some affluent customers will probably be lost — for Ferragamo and for the sector.

The group will close some stores in China next year, mainly in tier-three cities, and expects direct online sales to perform well in that market.

What about categories and the full-year target?

Footwear rose 1.3 percent to 297 million euros. Leather goods fell 5.8 percent to 270.3 million euros — roughly 27 million euros below the prior-year level. Apparel gained 2.6 percent to 41.8 million euros, and silk edged up 0.3 percent to 50.8 million euros.

Asked whether positive feedback on the spring collection designed by creative director Maximilian Davis is converting into commercial success, Greco said progress has been made but the process — involving merchandising, logistics and external researchers — still needs refining. "We are on the right track but there is room for improvement," he said.

On the analyst consensus of 950 million euros in net revenues for the full year, Greco was noncommittal: "It is difficult to say if it would be achievable. I would say that it assumes a nice, a good Christmas sales season. We live in a very turbulent environment, and the business shows a certain volatility."

Despite the uncertainty, Greco said the group remains "confident in the relevance of its medium to long-term strategic direction," citing a gradual strengthening of underlying business trends into 2026.