Ferragamo family seeks to send message of stability after CEO Gobbetti's exit

By Claudia Cristoferi and Elisa Anzolin

MILAN (Reuters) - Ferragamo's founding family has sought to reassure staff this week that it remains committed to the luxury group after Monday's surprise news that CEO Marco Gobbetti was leaving, a person with knowledge of the matter said.

Italy's Ferragamo, which has been struggling to revitalise its product offering and sales, has long been seen as a potential merger and acquisition target.

While publicly ruling out the idea of a sale, the Ferragamo family has in the past explored the idea of reducing its stake, sources have previously told Reuters.

For now, the family's focus is on steadying the group after Gobbetti's departure next month barely three years into his tenure, according to the source.

A second source close to the matter confirmed the family was not currently looking at a sale.

During Gobbetti's tenure, sales decreased by roughly 10% and shares lost around two-thirds of their value, with the lack of marked improvements stoking tensions between the Ferragamos and the former Burberry chief, the person and another source said.

A lack of communication between the manager and stakeholders compounded problems, with the Ferragamos feeling they had little clarity on the group's turnaround prospects, the two sources said.

Asked for a comment, Gobbetti and Ferragamo referred to this week's press release on the CEO's departure, which they said was mutually agreed.

In 2022, Gobbetti had promised a quick turnaround, vowing to increase investments, revamp stores and attract younger customers to double revenue to almost 2.3 billion euros ($2.4 billion) by 2026. Sales dropped 8.2% last year to 1.03 billion euros.

The Florentine group's market capitalization dwindled to 1.2 billion euros, with Ferragamo's shares underperforming the broader European luxury sector.

FERRAGAMO'S DECADE-LONG OVERHAUL

Worse hit than others by the COVID-19 pandemic due to its relatively bigger exposure to China, Ferragamo failed to take advantage of the rebound driven by pent-up demand, and is now grappling like the rest of the industry with cooling demand.

"Having only one brand and being focused on a limited number of categories contributed to exacerbating the crisis", said Carlo Alberto Carnevale Maffe, a Strategy and Entrepreneurship professor at SDA Bocconi School of Management.

Ferragamo has been working on a revamp for almost 10 years during which two other CEOs have left the group.

   In 2018 Eraldo Poletto, appointed to succeed long-standing boss Michele Norsa as CEO, stepped down after less than two years in the wake of the company saying that it could not stand by its medium-term targets.

Micaela Le Divelec Lemmi, a former Gucci executive, was appointed as the group's new CEO a few months later, but lasted only until 2021.

In every crisis, the family has turned back to trusted former CEO Michele Norsa for help with the transition. Norsa will be part of an advisory committee including James Ferragamo and former general manager Ernesto Greco which will assist Chairman Leonardo Ferragamo until a new CEO is found.

($1 = 0.9633 euros)

(Reporting by Claudia Cristoferi, Elisa Anzolin; Editing by Keith Weir, Valentina Za and Emelia Sithole-Matarise)