Salvatore Ferragamo Shares Climb After Governance News, Rumors of C-suite Changes

January 21, 2021

MILAN — Governance changes emerging at Salvatore Ferragamo impacted the performance of shares of the Florence-based group on Thursday, closing up 6.05 percent at 16.13 euros at the end of trading.

The gains followed the news a day earlier that Ferragamo Finanziaria SpA, which controls the luxury goods house, revealed it was cutting back the number of family members sitting on the board of Salvatore Ferragamo and increasing the number of independent directors, giving a mandate to an executive search firm to complete the process.

WWD reported that market sources believe Michele Norsa, who joined the Salvatore Ferragamo company in May 2020 and whose contract is said to expire at the time of the annual meeting, will exit Salvatore Ferragamo, as will chief executive officer Micaela Le Divelec Lemmi. A more independent board, appointed by professionals, leads to additional speculation about a possible sale of the company, although the Ferragamos have repeatedly denied that.

“We think management changes are possible, with the goal to accelerate the relaunch of the brand,” said Equita analysts in a report. The decision to reduce the number of family members “could be seen as a sign of an increased opening toward projects of integration with outside realities.”

On Wednesday, Ferragamo said Claudio Costamagna has become a member of the board. Costamagna was previously a board member of Luxottica and Bulgari. A banker and businessman, and a former chairman of Cassa Depositi e Prestiti, controlled by the Italian Ministry of Economy and Finance, he has a successful track record in merger and acquisition operations.

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According to Intermonte, the arrival of Costamagna and his “prestigious curriculum” makes it “plausible to imagine he could help the family to evaluate extraordinary operations.” A change in CEO would lead to “speculative scenarios, but would also bring uncertainty at the operative level if the family decides to maintain control over the company. As we have said over the past few months, we believe the company could decide on a reshuffle of shares without yielding control.”

Exane underscored that an “M&A would make a lot of sense for Ferragamo, as we believe that a significant investment in marketing is needed to reignite like-for-like growth, drive back space productivity and margins as a consequence. These investments would be absorbed much more easily by a larger entity or taking the company out of the market, by a private equity or sovereign wealth fund.”

The Ferragamo board was to remain in charge until the end of the 2020 financial year, which closed on Dec. 31. The change is to be approved during the annual general meeting scheduled for April 22. At that time, a new president of Salvatore Ferragamo will be elected and he will not have an executive role. Ferruccio Ferragamo holds the role of chairman.