Signaling the importance of the key Asian market for the Salvatore Ferragamo Group, the Florence-based company revealed on Wednesday it will become the sole shareholder of the three Greater China joint ventures established with entrepreneur Peter K.C. Woo.
Ferragamo’s board has approved the purchase of minority stakes held by Woo’s Imaginex Holdings Limited and Imaginex Overseas Limited for a total of $42 million.
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Chairman Leonardo Ferragamo said the acquisition “concludes an extraordinary path of alliance and development conducted, together with Peter Woo, over the last 35 years, which has allowed the group to be among the first Italian luxury brands to establish itself in this important market.”
He concluded that “with the consolidation of the equity interests, having reached an efficient size and organization, we will be able, with increased intensity, to continue to strengthen our presence in these markets, continuing to count on the alliance of Peter Woo, who remains a shareholder and director of our company.”
The Woo family, who among other interests also owns the Lane Crawford Joyce Group, has been a partner of Ferragamo in Greater China for more than 20 years and helped distribute the brand in China, Hong Kong, Taiwan and Macao.
Ferragamo and its subsidiary Ferragamo Hong Kong purchased the minority interests held by Imaginex Holdings Limited and Imaginex Overseas Limited in the three joint ventures — Ferragamo Moda (Shanghai) Co. Limited (FMS), Ferragamo Retail Macao Limited (FRM) and Ferrimag Limited (FIM) — incorporated to distribute the brand’s products in the Greater China area.
The equity interests involved in the purchase are equal to 25 percent of FMS and FIM and 24.8 percent of FRM, resulting in Ferragamo and FHK becoming the sole shareholders.
The payment will be settled from available cash resources at the same time as the transfer of the equity interests and will take place within Nov. 9.
Chief executive officer and general manager Marco Gobbetti said the “conclusion of the transaction will strengthen Ferragamo’s presence in the Greater China area, one of the most relevant markets for the group, at a very important time for the brand’s relaunch.”
Last week, commenting on the company’s performance in the first nine months of 2023, Gobbetti said that the firm’s midterm ambition is confirmed. In May last year, the executive said he was aiming to double Ferragamo’s sales in four to five years.
In line with this plan, Ferragamo is consolidating and relaunching its presence in the Greater China area, “which represents an extremely relevant market with very high growth potential” for the company.
As reported, in the period ended Sept. 30, sales were down 8.3 percent to 844.2 million euros compared with 920.7 million euros in the first nine months of 2022, partly impacted by a negative perimeter effect both at retail and at wholesale.
Revenues in Asia Pacific, Ferragamo’s biggest market, fell 16.4 percent to 264 million euros, accounting for 32.3 percent of the total. “Chinese spending is still below pre-COVID[-19],” said Gobbetti last week, while noting he had seen “a bit of travel to Japan but very limited intra-Asia and extremely limited to Europe,” leveraging domestic consumption. Local spending in China softened in the third quarter compared with the second quarter, and uncertain demand in the summer was reported.
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