May 7, 2018 / 6:11 PM / in 3 months

Italy's Ferragamo still has work to do in turnaround, chairman says

MILAN (Reuters) - Italian luxury goods group Salvatore Ferragamo (SFER.MI) still has work to do to turn itself around, its chairman said on Monday, as the company warned currency swings and a bias in sales towards lower-margin goods could hit results this year.

FILE PHOTO: Models present creations from the Salvatore Ferragamo Autumn/Winter 2017 women collection during Milan Fashion Week, Italy February 26, 2017. REUTERS/Alessandro Garofalo/File Photo

The Florence-based group, which issued a profit warning in December, has been battling falling sales and profitability, partly due to a clean-up of inventories.

FILE PHOTO: Italian luxury fashion house Salvatore Ferragamo's logo is seen at the flagship in Rome, Italy, February 18, 2016. REUTERS/Stefano Rellandini/File Photo

The shoemaker parted ways with Chief Executive Eraldo Poletto in March a year after he unveiled an ambitious plan aimed at refreshing the style of its products and increasing its appeal to a younger clientele.

“We have to work, we still have a lot to do,” executive chairman Ferruccio Ferragamo said on Monday, adding the group was focusing on its organization and products, as well as containing costs.

Ferragamo said the group would press on with the strategy started under Poletto but would put on hold “everything that is very costly”.

Last month, the family-controlled company appointed a Gucci executive - Micaela Le Divelec - as general manager of the group, postponing the choice of a new CEO.

Ferragamo reiterated he hoped the new CEO would come from within the company.

The group said 2018 sales and margins could be undermined by currency swings and an unfavorable distribution of sales through its various sales channels, after posting first quarter results in line with expectations.

Although like-for-like sales in the first three months of the year were up 0.3 percent, sales in its retail channel - two thirds of total revenues - were down 3.6 percent at current exchange rates.

That was partially offset by a rise in wholesale revenues, up 2.6 percent.

Reporting by Giulia Segreti; Editing by Mark Potter

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