Ferrari’s (NYSE:RACE) New Board Made Up Of Luxury Brand Experts
Ferrari’s long-term prospects look even more exciting on the back of Ferrari’s best year ever with record sales and a 9.4% increase in net income.
Ferrari NV’s (NYSE:RACE) ambition to compete with luxury-goods brands like Hermes or Prada is make headway in the 6 months since its IPO, never-the-less there is pressure on the new board to strengthen the iconic Supercar maker’s marketing strategy.
Skepticism over the company’s prospects caused the stock come of about 18% since its October 2015 listing.
The new Board of Directors is packed with luxury experts, they will address the challenge of putting resources into its Supercars, maintaining its iconic presence in Formula 1 racing and extending the brand into more high-end products.
Ferrari’s start as an independent company coincides with a rough time for the luxury-goods industry.
The terrorist attacks in Paris and Brussels deterred tourists from Asia and the Middle East from traveling to major European cities to buy goods. That has hurt LVMH, Burberry Group Plc and Prada SpA.
Ferrari is working to hone its non-automotive products after realizing some fashion items in its stores are not luxury brand extension Chairman Sergio Marchionne said Friday in an interview after leading Ferrari’s first annual shareholders meeting as a stand-alone company.
Ferrari’s luxury expansion was a cornerstone of Mr. Marchionne’s sales presentation to investors as the company was spun off from Fiat Chrysler Automobiles NV (NYSE:FCAU) where he is the CEO.
His responsibility for implementing Ferrari’s strategy will increase after the supercar maker’s long-time CEO Amedeo Felisa retires.
Mr. Marchionne told shareholders Friday that Mr. Felisa will decide how long he wants to stay on as CEO.
To evaluate its luxury options, Ferrari’s new board now includes Delphine Arnault, E-VP at LVMH Moet Hennessy Louis Vuitton SE; Adam Keswick, deputy managing director of Jardine Matheson Holdings Ltd., the parent of Mandarin Oriental Hotel Group, and Lapo Elkann, a member of the Agnelli Family who helped to create Ferrari’s “Tailor Made” customization unit in Y 2011. Lapo’s brother John, the head of the Agnelli Family which controls Ferrari, will also be on the board. John Elkann is unfazed by the share’s market performance.
The supercar maker’s “long-term prospects look even more exciting on the back of Ferrari’s best year ever,” with record sales and a 9.4% increase in net income, John Elkann said Thursday to investors in the family’s Exor SpA holding company.
Ferrari’s expansion into luxury fashion and accessories has already had its share of headwinds.
“We have a great basis and great DNA in which to build the brand extension,” but “we have to do it very carefully” to maintain a high-end image, Mr. Marchionne said Friday.
Both John Elkann and Sergio Marchionne have spent lot of time discussing it with potential sources of help and partners, with a target of bringing out new products by the time Ferrari celebrates its 70th Anniversary in Y 2017.
Ferrari’s merchandising generated about EUR 21-M in revenue in Y 2014, or less than 1% of the total, according to published data.
Ferrari did not break out the details for last year, sponsorship, commercial and brand activities were largely flat according to analysts .
Ferrari has notable success is in licensing the brand to amusement parks.
Ferrari World in Abu Dhabi, which features racing-themed rides like the Formula Rossa roller coaster, will be joined by Ferrari Land near Barcelona next year. A 3rd park is being developed in China, and there are plans for a site in North America as well. The trademark red of the brand’s Formula 1 cars features prominently in the developments.
The Ferrari brand is iconic, its image is related to Supercars that it is may prove difficult to expand it beyond the automobile and racing business.
Ferrari shares finished Friday at: Ferrari N.V. (NYSe: RACE) 43.97 Up 1.49(3.51%) 4:10p EDT Overall Sentiment Bullish
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