From the Runway to Retail Stores: Where do Fashion Houses Make Their Highest Profits?
What comes to mind when you hear Salvatore Ferragamo? Luxury fashion, jetsetters and posh runway shows? Not many people think of the business behind the name, but it's time to really ask ourselves — is the fashion industry worth all the competition? What lies on the other side of what we read in the magazines? That's where the profit is.
Why do most of us enjoy runway shows? The glitz, glamour and models are all a good start, however, when you change your perspective and look from a business point of view, everything transforms. Now you have profit margins, corporate responsibilities, a board of directors, retail stores and income statements. Let us look at the latter of the bunch to determine how well those fancy shows pay off, how the models make so much money and where the money comes from.
According to a Salvatore Ferragamo press release, the results for the first quarter are up. "As of 31 March 2013, the Salvatore Ferragamo Group has posted Total Revenues of 282 million Euros, with a 9 percent increase at current exchange rates, over the 260 million Euros recorded in 1Q 2012. Revenue growth at constant exchange rate has been 10 percent. The solid growth registered in the first three months of 2013 is even more relevant considering that in the same period of 2012, revenues had already increased by over 23 percent," reads the release. "First quarter: Revenues are up +9 percent, Operating Profit +29 percent and Group Net Profit +103 percent versus the numbers from 2012."
If these numbers are only from the first quarter, can you imagine what these numbers will look like by the end of the year? A majority of Ferragamo's profit is from retail sales; which explains why there is so much competition in the fashion world. While getting into the industry requires hours of hard work, judging by Ferragamo's recent income report, the pros outweigh the cons when it comes to the final pay off.