The unexpected departure of Chief Executive Officer Marco Gobbetti has left Italy's Salvatore Ferragamo at a crossroads, highlighting the ongoing challenges faced by the storied luxury brand. Gobbetti's exit, announced recently, has prompted Ferragamo's founding family to reaffirm their commitment to the company amid market turmoil and speculation about its future.

During Gobbetti's short tenure of three years, Ferragamo struggled to regain its market position, with sales plummeting by about 10% and shares losing nearly two-thirds of their value. These difficulties have fueled tensions between the Ferragamo family and Gobbetti, a former Burberry executive. A lack of clear communication on turnaround prospects further exacerbated these issues, according to sources close to the company.

Gobbetti had set ambitious goals for the company, including a revenue target of nearly €2.3 billion by 2026, aiming to revamp stores and appeal to younger consumers. However, sales fell 8.2% last year to €1.03 billion, reflecting broader industry struggles and a failure to capitalize on post-pandemic demand. Ferragamo's heavy reliance on the Chinese market made it particularly vulnerable during COVID-19, mirroring challenges across the luxury sector.

The Ferragamo family has been quick to quell rumors of a potential sale, though they have previously considered reducing their stake. Presently, their primary focus is stabilizing the group and ensuring a smooth leadership transition. In the interim, the family has turned to trusted former CEO Michele Norsa and an advisory committee to assist Chairman Leonardo Ferragamo.

Ferragamo has been grappling with a decade of upheaval, marked by multiple leadership changes and strategic missteps. Eraldo Poletto, appointed in 2018, resigned shortly thereafter, followed by his successor Micaela Le Divelec Lemmi, a former Gucci executive. Both faced challenges in meeting the company's medium-term targets, underscoring Ferragamo's enduring struggles to compete with its European luxury counterparts.

The company's market capitalization has dwindled to €1.2 billion, underperforming the broader European luxury sector. Analysts like Carlo Alberto Carnevale Maffe, a professor at SDA Bocconi School of Management, attribute Ferragamo's crisis to its narrow product focus and the intensifying competition in the sector. He suggests that Ferragamo's limited brand portfolio may have exacerbated its difficulties.

As Ferragamo prepares for a leadership change, the luxury brand is under pressure to innovate and adapt to shifting market dynamics. Investors remain cautious, closely watching for any strategic changes that could signal recovery or further decline. The coming months will be critical in determining whether Ferragamo can regain its footing and realize its ambitious financial targets.