ITALY. Italian fashion house Salvatore Ferragamo is poised to go public with a stock market listing in the second semester of 2008.
Luciano Bertinelli, Managing Director of Ferragamo Parfums (pictured left) made the announcement at the official preview party for the new male fragrance F by Ferragamo Pour Homme, which took place at the Salvatore Ferragamo boutique in Paragon, Singapore, during the TFWA Asia Pacific exhibition.
“We [Salvatore Ferragamo] are in a magic moment,” Bertinelli told the guests at the presentation. “We will be a public company in one year. We’re working hard on that. We will become public in the second semester of 2008.”
Following the flotation, the Ferragamo family will own the majority of the shares.
“This [flotation] will be a big challenge and very different for us,” said Bertinelli.
Ferragamo Parfums closed the year with sales +40% up on 2005, he added.
In an interview after the preview event, Bertinelli said the company was busy undertaking roadshows to attract investors and advisors in key locations such as New York, London and Milan, as it is not yet decided where the company will list its shares.
Bertinelli said that the Parfums division closed 2005 with more than €50 million in wholesale turnover. This had been a “huge achievement” in only five years, he noted, because the fragrance arm was established in 2002.
Thanks to heavy investment, the Parfums arm is now set for an ambitious growth target. “The objective is to double the business in the next three years to reach 9-10% of Ferragamo group turnover by 2010,” he said. The division currently contributes 6% of total turnover.
One big product launch will be unveiled each year until 2010, according to Bertinelli.
Opportunities for growth
The company aims to expand its distribution, as well as its product and investment. Several opportunities for growth exist, including China and India. In the Americas, the company has just begun distribution in Brazil – a “fantastic market and important for us” – as well as Argentina and Mexico.
Europe also holds big opportunities, notably German and the UK, where Bertinelli aims to gear up distribution.
By region, Asia currently represents 40% of total Ferragamo Parfums sales, followed by Europe and the Americas with around 25% each.
The number one fragrance market overall for the company is Japan, where the Charms fragrance is the top-selling women’s line. China is also a “giant market” for the firm at number two, said Bertinelli, followed by South Korea. Other world markets follow.
He attributed the firm’s success in Asia to in-depth product development that focused on the particular tastes and requirements of that region, in terms of fragrance juice, packaging, etc.
Travel retail update
Travel retail makes up a small but growing share of Ferragamo Parfums’ total business, but Bertinelli hopes to at least double this over the next three years. He is aiming for duty free sales to contribute an industry-average share of 15% of fragrance turnover.
The firm will be selective in its travel retail distribution, he noted. DFS in Asia is already a key client, and the company recently hired Singapore-based Jonathan Holland Associates to act as its Asian travel retail market agent.
“We will focus on duty free and we will develop special products,” Bertinelli told The Moodie Report after the preview party for the new F by Ferragamo Pour Homme fragrance.
In Asia, Ferragamo Parfums is already present on regional flag carriers Singapore Airlines, Malaysia Airlines, China Airlines, Thai Airways and Korean Air.
In terms of ground stores, the company’s key clients include DFS at Changi Airport, Nuance-Watson in Hong Kong and Singapore, King Power in Bangkok, and Sunrise in Beijing and Shanghai Airports. The company has a network-wide listing with the government-owned Chinese operator China Duty Free Group.
Ferragamo fragrances perform particularly strongly in Hong Kong and in South Korea with Lotte Group, but the number one travel retail market is Japan, according to Bertinelli, where the products are carried in all the major airport locations such as Tokyo Narita and Osaka Kansai with multiple operators, including JATCO and NAA.
Bertinelli attributes the company’s success in Asia to developing special products for the market, focusing on the particular requirements of the consumer in terms of packaging, fragrance juice, etc. The fragrances therefore tend to be sweeter, fruitier, younger and with an emphasis on pastel colours, such as pink, baby blue and purple.
One example of a customised product for Japanese market was Incanto Dream, launched in 2005, followed by Incanto Charms which had an Asia-wide distribution. Incanto Shine, with its purple colour theme and dragonfly signature, was introduced two months ago, again across the whole of Asia.
“The [sales] results are amazing,” enthused Bertinelli, revealing that Charms was the number one fragrance on the Japanese market in 2006.
However, in order not to flood the market, Incanto Dream will cease production in January 2008, to be followed by another new launch.
*In separate news, Salvatore Ferragamo is preparing to develop new beauty products especially for travellers. A spokeswoman said these products would include amenity kits for first-class airline passengers and items placed in luxury hotel rooms. No further details were available.
MORE STORIES ON FERRAGAMO PARFUMS
Ferragamo Parfums: F for Fragrance – 22/05/07
Ferragamo Parfums prepares to deliver six of the best – 13/12/06
Singapore Airlines teams up with Ferragamo Parfums – 28/11/06
