Family shareholders of luxury brand Salvatore Ferragamo have canceled plans to sell a minority stake in the company and are seeking to review its management, according to several people familiar with the situation.
The move comes as Ferragamo, famous for its shoes worn by Hollywood stars and formal menswear, seeks to turn around its fortunes after years of fluctuating growth and the fallout from the Covid-19 crisis that has driven demand of luxury goods.
Last year, the Ferragamo family, which owns a 54% stake in Milan-listed Ferragamo Finanziaria, which controls the brand, considered selling a minority stake in the holding company to raise capital.
However, several investors approached said they were disheartened that the Ferragamo family would not relinquish any control over the governance of the company in exchange for a sale of a stake.
According to several relatives of the family, the put option has been suspended while the group is focusing on relaunching the brand with new management. Sales negotiations could be restarted at a later date.
“Covid-19 has been a tsunami for the business, but the family loves it and [is not ready] sell, ”one of the people said.
“The family has now chosen to prioritize a business turnaround, starting with a management overhaul,” said one investor who was approached to buy a minority stake.
The contracts of Ferragamo’s creative director and general manager, which will expire in the coming months, are unlikely to be renewed, according to several people familiar with the situation.
Creative Director Paul Andrew, a British shoe designer, and Managing Director Micaela Le Divelec, a former Gucci executive, were named in 2019 for growth, people said.
Ferragamo declined to comment.
The brand’s revenues have fallen 38.5% in the first nine months of 2020 compared to the same period in 2019, amid extended store closures and global lockdowns to fight the march of the coronavirus pandemic .
The company, which is due to report annual results on Thursday, said last week it hired an executive search firm to select independent members ahead of its board renewal in March.
Ferragamo Finanziaria has also appointed former Goldman Sachs banker Claudio Costamagna to the board of directors following the resignation of Giuseppe Anichini, a longtime collaborator of the Ferragamo family.
The new independent board members will replace family members “based on best practice,” the company said. The family also agreed that the new president of the family farm would not have an executive role.
Thomas Chauvet, luxury analyst at Citi, said Ferragamo “isn’t growing very much, but it’s not struggling either. I think the family want it to work, they love the business, there is no sense of urgency ”.
According to another investor, the brand’s debt levels are low and while “some members of the Ferragamo family would prefer to sell to cash in and focus on other investments, the company still has leeway before it is forced to sell”.