Bernstein on Monday moved Salvatore Ferragamo into a more favourable rating, upgrading the luxury fashion group from "underperform" to "outperform" and increasing its price target to €7.50 from €4.40. The brokerage said its decision was prompted by early evidence of operational change that emerged around Ferragamo's FY25 results.
In its note, Bernstein said "recent results and conversations with management suggest that Ferragamo is moving in the right direction," after what the firm described as more than a decade of "false starts and unfulfilled promises." The research house flagged concrete adjustments across product assortment, retail footprint and distribution strategy as the basis for its revised view.
On the product side, Ferragamo plans a significant reduction in stock-keeping units, targeting up to a -25% cut. Inventories were down -10% year-on-year in FY25 and are forecast to fall at a similar pace in FY26E. Bernstein said the streamlined assortment has improved the in-store experience, making locations "easier to read and more engaging." The brokerage identified a renewed alignment between brand positioning, product and communication, with a sharpened emphasis on core categories such as women’s shoes and the Hug bag. It noted the Hug bag is priced at €2,450, positioned below several competing models.
Retail changes are also under way. The company intends to close 70 stores over 2025-26 and to reopen roughly half of them in new locations, primarily in China. Bernstein added that around 40% of the retail network has already been upgraded with improved visual merchandising.
Wholesale is being tightened as well. Bernstein reported wholesale sales fell -17% in FY25 and are expected to decline a further -6.8% in FY26E as the company exits partners implicated in grey market activity. The brokerage highlighted that these steps are designed to better control distribution, reduce channel conflict and protect brand equity.
Bernstein also pointed to shifts in demand patterns, saying "the luxury market is buying classics again and coming back to Ferragamo," and cited the line that "the tie is coming back. In fact, it is back." The research house used these signs of returning demand for classic categories to support its more positive stance.
On the numbers, Bernstein projects revenues of €977 million in FY25A, €968 million in FY26E and €1.04 billion in FY27E, with organic sales growth at (3.7)%, 3.5% and 4.1% respectively. It models an EBIT margin of (2.2)% in FY25A, rising to 3.9% in FY26E and to 6.1% in FY27E. Relative to consensus, Bernstein said it is "-2% below consensus on the topline and +1% on bottomline in FY26E," moving to "+1% and +7% respectively in FY27E."
The upgraded valuation underpinning Bernstein's new price target is based on a 2x EV/sales multiple, increased from 1.3x, which the brokerage said implies a 17% upside from the March 27 closing price of €6.40.
Separately in the coverage note, an AI-based stock-screener called ProPicks AI was mentioned as evaluating SFER alongside thousands of companies using more than 100 financial metrics. The note states the tool applies data-driven criteria to assess fundamentals, momentum and valuation, and cites past winners it highlights, including Super Micro Computer (+185%) and AppLovin (+157%).
What this means
The combination of assortment compression, inventory drawdown, a more selective wholesale approach and retail refreshment underpin Bernstein's move to a more positive rating. The firm expects these operational actions to support a gradual recovery in both top-line trends and profitability through FY27E.