Operating profit at Salvatore Ferragamo almost halved last year from 2022, weighed down by investments the Italian luxury goods group sustained as part of efforts to reverse a drop in sales.

The family-controlled luxury shoemaker is seeking to revive its fortunes, and adapt to fast-changing shoppers’ tastes, under former Burberry chief executive Marco Gobbetti, who took over in 2022.

Earnings before interest and tax came in at €72 million ($79 million), the group said on Wednesday, down from €128 million a year earlier though ahead of forecasts.

Analysts expected 2023 EBIT to drop to €63 million, according to a median LSEG consensus forecast.

The company reported in January an 8.1 percent drop in sales, prompting CEO Gobbetti to warn that hitting turnaround goals could take longer than anticipated.

Operating costs declined slightly, but grew as proportion of revenues, as the group “continued to invest, as planned, in marketing and communication.”

Gobbetti confirmed in a statement that “the current market backdrop” affected “the timing of our initial assumptions.”

However, “we continue to pursue our growth ambition, while also protecting profitability through ongoing attention to the quality of sales and disciplined focus on costs,” he said.

Ferragamo said it was cutting its proposed dividend to €0.10 per share from €0.28 the previous year.

By Elisa Anzolin Editing by Keith Weir and Valentina Za

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Ferragamo CEO Warns Turnaround May Take Longer After 2023 Sales Drop

Sales at Italian luxury goods group Salvatore Ferragamo dropped by 8.1 percent at constant currencies last year, prompting chief executive Marco Gobbetti to warn that hitting turnaround goals could take longer than anticipated.