Ferragamo Picks Gucci Veteran to Lead Faltering Turnaround

(Bloomberg) -- Salvatore Ferragamo SpA appointed Micaela le Divelec Lemmi, a 20-year veteran of French luxury conglomerate Kering SA, to become its new chief executive officer as the Italian shoemaker seeks leadership for its turnaround bid.

Le Divelec Lemmi, who served as chief financial officer of Kering's Gucci brand, has been general manager of Ferragamo since April. The stock rose as much as 4.5 percent Wednesday, giving the company a market value of 3.4 billion euros ($4 billion), as analysts said the appointment signaled an extended rebuilding effort at Ferragamo.

“We're intrigued by her strong finance and operational background developed on the front lines of what is now one of the most sophisticated luxury conglomerates in the world,” wrote Omar Saad, an analyst at Evercore ISI.

Ferragamo, known for making shoes for Audrey Hepburn and handbags for Margaret Thatcher, has struggled to refresh its look in recent years. Former CEO Eraldo Poletto stepped down earlier this year after the company backed away from its financial targets, saying it needed to spend more on technology and marketing.

Ferragamo said revenue fell 3.4 percent at constant exchange rates in the first half to 674 million euros. Analysts had predicted 685 million euros. The CEO appointment is effective immediately, the Florence-based company said in a statement Tuesday.

“I acknowledge the fact that there is some work that needs to be done,” Le Divelec Lemmi said in an interview. “I really believe that this is a brand which deserves respect. This respect is what is animating me.”

Ferragamo's sales fell amid a buoyant market for luxury goods, driven by runaway Chinese demand. Sales at French luxury giant LVMH expanded by 11 percent during the most recent quarter, while Gucci grew 40 percent.

Second-quarter sales took a hit as Ferragamo restricted markdowns in an effort to protect its high-end positioning, Chief Financial Officer Ugo Giorcelli said on a call with analysts. The shares have fallen about 20 percent since the founding family sold a stake in June.

“We lack visibility and details around the potential traction of management's turnaround plan, and believe the newly appointed CEO may imply a continuing transition period,” wrote Hermine de Bentzmann, an analyst at Raymond James.

Poletto had pushed for more investment in e-commerce and online communications. He also brought in new creative directors, including the British shoe designer Paul Andrew, to revamp its offer. Poletto has since joined Coach owner Tapestry Inc. as CEO of the Stuart Weitzman brand.

To contact the reporter on this story: Robert Williams in Paris at rwilliams323@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier, John Lauerman

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