Wednesday, December 25

Ferrari Collaborates with Armani over Merchandise, Entertainment & others

Sportscar maker Ferrari said Monday it was starting a fashion collaboration with Giorgio Armani as part of its long-awaited strategy to spread its brand to other sectors and squeeze more value out of it.

CEO Louis Camilleri told analysts that Ferrari aims to earn 10% of earnings before interest and taxes in seven to 10 years from three new areas like apparel, entertainment and luxury services.

The Italian company aims to both increase and retain a greater portion of the 800 million euros (USD 892 million) in products bearing the carmaker’s name, the CEO said.

“This is not just about profit, this is about enhancing our brand equity and the vitality and vibrancy of the brand,” Camilleri said.

He said Ferrari will focus the use of its brand, reducing licenses by half and eliminating a third of the product categories currently available.

Besides the apparel line to be produced in Italy through a long-term deal with Armani, Ferrari will expand its entertainment offerings, which currently comprise theme parks in Abu Dhabi and Barcelona and two museums in Italy, with driving simulation centers to leverage its Formula 1 racing heritage.

The third category, luxury services, will include a new restaurant with Michelin-star chef Massimo Bottura at the Maranello headquarters to open at the end of 2020.

Ferrari raised its earnings forecast, citing a robust third-quarter performance including a 9 per cent increase in deliveries.

It raised its full-year forecast for net revenues to 3.7 billion euros, from 3.5 billion euros previously. It lifted its prediction for earnings before interest, taxes and amortization to 1.27 billion euros from 1.25 billion euros.

In the third quarter, earnings before interest, taxes and amortization rose 11 per cent to 311 million euros. Revenues rose 9 per cent to 915 million euros.

Deliveries hit 2,474 vehicles, lifted by the Ferrari Portofino and the 812 Superfast. They were up by double-digits in Europe, were flat in the Americas and dipped 2 per cent in greater China. Full-year volumes will be in the 10,000-region.

Ferrari has unveiled four new models this year as it renews a product portfolio, and will preview a fifth next Wednesday at an event in Rome.

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