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Ferragamo's Handbag Business Is Booming

Ready-to-wear and fragrances? Not so much.
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Salvatore Ferragamo is off to a pretty good 2015. Revenue was up 10 percent to €327 million (about $371 million) for the first three months of the year with overall net profit up 17 percent to €32 million (~$36 million).

The brand was especially successful when it came to selling handbags and leather goods. The category makes up 37 percent of Ferragamo's business and saw a 16 percent increase this quarter. This is also the category Ferragamo pushes the most when it comes to advertising and PR. Bags are featured most prominently in its ad campaigns and the brand pulled out all the stops when it came to promoting the launch of its Fiamma bag last spring, with a series of films and ads starring It Girls and a fancy party attended by lots of VIPs — resulting in significant coverage by fashion press.

Other accessories did well, too: Sales of shoes, which make up 41 percent of Ferragamo's business, increased by 9 percent; while silk and other accessories, which account for 7 percent of total sales, jumped 11 percent. Licensed goods like sunglasses and watches saw a 14 percent increase, though they make up less than 1 percent of the brand's business.

By comparison, ready-to-wear, which makes up 7 percent of total sales, increased by only 3 percent and sales of fragrances, which make up 6 percent, declined by 11 percent.

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The company has shown strong sales growth in China for the past several years, and that has not changed despite the government's corruption crackdown, which has hurt the performance of other luxury brands, including Prada, Hermès and Gucci. (Part of Ferragamo's continued success may lie in the fact that its goods are less conspicuous and logo-driven than its competitors.) The company considers the Asia-Pacific region to be its top market, largely thanks to China, where revenue was up 22 percent for the quarter.