Ferrari (NYSE:RACE) expects to make good on a promise to introduce new luxury merchandise in 2017, as the supercar maker continues to seek new business opportunities beyond its iconic cars.
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Since its spinoff from Fiat Chrysler Automobiles (NYSE:FCAU), Ferrari has laid out plans to transform itself into a high-end brand that does more than sell sports cars and race in Formula 1 events. The Italian auto company is already featured on licensed merchandise such as hats, jackets and watches. But Ferrari has said it will ramp up its investments in luxury goods, believing it can leverage its recognition as a premium brand to take on the likes of Prada.
In its earnings report on Monday, Ferrari said the first branded goods “akin to its luxury performance sport car offering” will launch next year to coincide with Ferrari’s 70th anniversary.
“As indicated during the IPO process, Ferrari is aggressively exploring the luxury goods space that extends beyond luxury performance sport cars, while nurturing and expanding the Scuderia Ferrari merchandising concept, which is inextricably linked to its racing activities in F1,” Ferrari said.
Ferrari’s sponsorship, commercial and brand revenue—including Ferrari merchandise and racing endorsements—increased 8% to 118 million euros ($136 million) in the first quarter. According to the company, the year-over-year gain was mostly due to a stronger Formula 1 championship ranking.
Overall, Ferrari reported a net profit of 78 million euros ($89.8 million), up 19% versus the same quarter last year. Revenue grew 8.8% on sales of the recently launched 488 GTP and 488 Spider. The Maranello, Italy-based company subsequently raised its full-year earnings outlook, saying it expects to book a record year.
Ferrari chairman Sergio Marchionne, who oversaw the spinoff as CEO of Fiat Chrysler Automobiles (NYSE:FCAU), is taking on the additional role of Ferrari’s CEO, according to a separate announcement on Monday. Marchionne replaces Amedeo Felisa, who spent 26 years at Ferrari.
Ferrari shares were down 3% at $44.45 in recent trading, a decline of nearly 15% from the company’s IPO price of $52 a share.
Marchionne has led Ferrari’s foray into luxury goods and other areas of potential growth. Earlier this year, Ferrari signed a non-binding agreement to build a theme park in one of China’s primary cities. The first and only Ferrari World opened about five years ago in Abu Dhabi.
Ferrari’s Formula 1 operation is also under the microscope. Disappointing race results were said to be a factor in the departure of former Ferrari chairman Luca Cordero di Montezemolo, who was forced to resign in 2014. Scuderia Ferrari, the company’s renowned racing team, had zero wins in 19 races during the 2014 season. It ended a 34-race winless streak last season.
Ferrari said the team “worked diligently” to prepare for the 2016 season, and through four races, Scuderia Ferrari has four top-three finishes.