• Shoemaker benefiting from selling more small leather goods
  • Sales so far this year ``not been particularly good''

Luxury shoemaker Salvatore Ferragamo SpA rose in early Milan trading after reporting quarterly earnings that beat estimates and forecasting “a positive year” amid a tough industry backdrop.

Earnings before interest, tax, depreciation and amortization increased 11 percent to 324 million euros ($365 million), Ferragamo said after European markets closed on Thursday. Analysts predicted 313.3 million euros. The shares rose as much as 3.7 percent.

Ferragamo is benefiting from selling more high-margin small leather goods and having shallower discounts. The gross margin widened 2.2 percentage points to 67.5 percent in the quarter, with the Italian shoemaker saying it can expand further to as much as 69 percent “in the medium, longer run.”

“The company looks well placed to continue to deliver superior earnings growth,” said Thomas Chauvet, an analyst at Citigroup.

Ferragamo’s performance is all the more striking, given an economic climate which the company said “shows critical elements for the luxury sector.” And sales in January and February “have not been particularly good,” the shoemaker said.

Like-for-like sales this year are down broadly in line with the single-digit percentage decline seen in the fourth quarter, Ferragamo said, echoing similar comments by Tod’s and Hugo Boss. While the sales were penalized by an aggressive refurbishment plan, the drop also reflects continued weakness in Hong Kong and Macau, subdued trends in the U.S. and more volatile tourist flows into Europe after the November terror attacks in Paris, Chauvet said.

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