Ferragamo CEO Quells Buyout Talk as Growth Surges in U.S., China
Salvatore Ferragamo SpA (SFER) Chief Executive Officer Michele Norsa quashed speculation of a buyout, saying the luxury shoemaker has the financial resources to fund expansion as growth accelerates in China and North America.
“I don’t see any reason” for a sale, Norsa said today in an interview on Bloomberg Surveillance with Tom Keene. A 2011 initial public offering gave financial freedom to members of the Ferragamo family, and the Florence, Italy-based company is generating greater-than-expected free cash flow, he said.
“If you become big enough you can survive alone,” Norsa said.
Ferragamo is likely to be among the next targets for cash-laden luxury-goods companies in search of growth, analysts at Equita Sim SpA predicted in July. Luxury buyouts will accelerate as smaller companies turn to buyers instead of lenders for capital, according to Milton Pedraza, CEO of the New-York based researcher Luxury Institute LLC.
Ferragamo’s revenue is increasing “stably double-digit” in North America, driven by local and tourist demand, Norsa said, adding that he sees more room to expand in the U.S.
While sales growth has slowed in Shanghai and Beijing because of a government clampdown on corruption and extravagant spending among officials, there are “great opportunities” to expand in China, the CEO also said.
“China is growing more abruptly in second- and third-tier cities where you can see 20 to 30 percent growth,” he said.
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