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UPDATE 1-China sales lift Salvatore Ferragamo profit, 4th quarter starts well
November 14, 2013 / 8:51 PM / 4 years ago

UPDATE 1-China sales lift Salvatore Ferragamo profit, 4th quarter starts well

* CEO says the fourth quarter started well

* CEO says has nothing to add to consensus EBITDA forecasts

* Asia remains driver of growth, Chinese retail sales rise (Adds detail, CEO quotes)

MILAN, Nov 14 (Reuters) - Italian luxury leather goods company Salvatore Ferragamo said it expects further revenue and net profit growth for the full year as it reported nine-month group net profit up 61 percent, boosted by continued sales increases in China.

The group’s chief executive said the fourth quarter had started well, after it made net profit of 112 million euros ($151 million) in the nine months to end-September, versus analyst expectations of around 110 million euros.

“The month of October was a good month, with numbers which were consistent or better than previous months,” CEO Michele Norsa said on a conference call.

Norsa said Ferragamo had nothing to say about analysts’ estimates of 265 million euros for full-year earnings before interest, tax, depreciation and amortisation (EBITDA).

“We as a company have no additional comments to that, we believe [the analysts] are very clever and professional,” Norsa said.

Norsa was speaking a day after fellow luxury group Tod’s said it would struggle to reach the market’s core earnings forecasts.

Ferragamo said the Asia Pacific region remained its strongest market in terms of revenue, growing by 12 percent at constant exchange rates in the first nine months, and speeding up to 13 percent growth in the third quarter.

The brand’s directly-operated retail stores in China showed sales growth above 20 percent in the first nine months, shrugging off lower growth in luxury sales in the country which consultancy Bain & Co sees slowing to 2.5 percent this year from 20 percent last year.

Sales in Europe rose over 11 percent in the first nine months, but slowed to 6 percent in the third quarter. Ferragamo attributed this to continued economic troubles in Europe and a difficult comparison with a strong third quarter last year.

Unusually among luxury companies, which usually make most revenue from stores they directly control, Ferragamo’s wholesale growth has outgrown its retail division in recent years.

But Norsa said the gap was now closing.

“Retail has been getting closer in terms of growth to wholesale, so we expect both, retail and wholesale, to grow at a very similar level in the last quarter,” Norsa said.

$1 = 0.7430 euros Reporting by Sabina Suzzi and Isla Binnie; Editing by Anthony Barker

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