Ferrari (NYSE:RACE) Expands Brand To Luxury Goods
With more than 220 Grand Prix wins, Ferrari is the most successful Formula One team in history, a record that goes a long way toward justifying high prices of its street-legal Supercars.
Ferrari’s Chairman Sergio Marchionne is working to expand the brand into luxury goods (apparel and accessories), and its racing pedigree is expected to help.
Mr. Marchionne has long maintained that the iconic car maker and world’s #1 brand has more in common with Hermes and Patek Phillipe than Fiat Chrysler (NYSEFCAU), Ford (NYSE:F) or Chevy (NYSE:GM).
“Ferrari cannot be viewed just as a carmaker,” Mr. Marchionne said after the company’s 21 October share offering on the New York Stock Exchange. It is “positioned in the luxury goods space with its relevant peers: the Hermes of the world, the Pradas.”
Many of Ferrari’s non-car products are designed for Grand Prix fans and car fans as well. But, getting into other kinds of luxury is a very different proposition for a brand such as Ferrari.
In a filing for its IPO, Ferrari said it plans to “selectively expand” sales of other goods, though Mr. Marchionne acknowledges it will take time to forge an image as a maker of anything besides cars. The company will hire people from the luxury trade to “build that business one piece at a time,” Marchionne said after the New York debut. “To be perfectly honest, we are not deep in that talent pool today.”
In Y 2011, then-chairman Luca Cordero di Montezemolo hired Andrea Perrone, former chief of luxury suitmaker Brioni, to expand the division. Mr. Perrone created a new clothing line called “Pr1ma,” selling 240-Euro ($266) Panama hats, 390-Euro sweaters, and 1,980-Euro suede jackets. The effort never really took off, though, and Perrone left in January. In September, Ferrari hired Luca Fuso from eyewear maker Safilo to replace him.
Ferrari was founded in Maranello, a small town in Northern Italy, by former race driver Enzo Ferrari. And since Y 1947, all of its cars have been made at a factory there, the Ferrari museum resides there too.
Ferrari sells its branded goods online and via about 20 franchised and 12 company-owned stores from Miami to Macau. Ferrari reported EUR 21-M in merchandising revenue last year, or 0.9% of its total sales of EUR 2.5-B, that is down from EUR 25-M in Y 2013.
The branding effort, which also includes a Ferrari theme park in Abu Dhabi, featuring the world’s fastest roller coaster and an Italian Trattoria, does not exhibit the consistency in pricing and quality needed to earn Ferrari a place alongside the global leaders in luxury.
Ferrari needs to position the brand at the very Top of the range across their activities or they will not be successful.
Mr. Marchionne said the success of Ferrari’s IPO proves that the company can be far more than just a maker of Supercars. It’s now valued at 20X its Y 2014 operating profit, much closer to the likes of Hermes and Prada than upscale automakers BMW AG and Daimler AG.
Ferrari NV’s shares finished Friday at 56.38, -0.65% or 0.37.
Ferrari’s “valuation and economic metrics are totally different from cars,” Mr. Marchionne said. “We will build a business in luxury goods that is as capable of producing profits as the car business is.”
Note: Ferrari NV announced Friday that its financial results for Q-3 of Y 2015 will be released Wednesday, 28 October 2015 . A live audio webcast of the Y 2015 Q-3 results conference call will begin at 5.30 p. GMT / 1.30 p EDT on Wednesday, 28 Octobe . Details for accessing this presentation are available in the Investors section of the company’s website at http://www.ferrari.com. For those unable to participate in the live session, a replay will remain archived on the corporate website for two weeks after the call.
Have a terrific weekend.
HeffX-LTN
Paul Ebeling
The post Ferrari (NYSE:RACE) Expands Brand To Luxury Goods appeared first on Live Trading News.