Translated by
Nicola Mira
Sep 17, 2020
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Italian leather goods, footwear sectors post dire H1 results

Translated by
Nicola Mira
Sep 17, 2020

In H1 2020, due to the economic crisis triggered by the Covid-19 pandemic, the leather goods industry in Italy ground virtually to a halt. According to figures collected by the Research Centre of Confindustria Moda, the association of Italy’s fashion and textile industry companies, on behalf of leather goods industry association Assopellettieri, the sector's revenue fell by 43.2%, a shortfall of €1.9 billion compared to the same period in 2019. 

The Italian leather goods industry’s revenue fell by 43.2% in H1 2020 - assopellettieri.it

Export revenue lost 30.6%, falling to €3.57 billion, a figure similar to that of three years ago, putting an abrupt stop to the growth trend experienced in recent years. Exports fell by 24.8% in volume, while average selling price per kg dropped by 7.6%. All product categories recorded significant losses: exports of handbags (which account for 65% of total export revenue) fell by 26% in value, luggage exports dropped by 30%, belts by 42% and small leather goods by 40%.

Geographically, there were significant losses in all export markets, except very rare exceptions like South Korea, where exports rose by 1.1%, and Poland, where they increased by 6.8%. Exports to the USA fell by 38% in value, those to Switzerland, the leading destination for Italian leather goods exports owing to its role as logistics hub for several labels, lost nearly 40%, and those to the EU lost 18%, with exports to France dropping by 9%, and those to Belgium and the Netherlands by 13%. Exports to Germany, the leading market volume-wise, dropped by 23%, those to Spain by 38% and those to Austria by 43.3%. The situation is equally worrying outside the EU: exports to East Asia as a whole lost 27.4% in value, with sales to China falling by 30%, to Hong Kong by 47% and to Japan by 30%. Revenue was down across the board in Russia, where it fell by 30.5%, the UAE, where it lost 39%, and Canada, down 29%. The shortfall was more limited in the UK, now a non-EU country, where exports fell by 13.4%.

In Italy, though retail sales of leather goods and footwear picked up after the nationwide lockdown was lifted in mid-May, the situation was still negative: retail sales dropped by 35.1% in May and by 12.8% in June, chiefly due to the plunge in the number of foreign tourists, keen consumers of high-end products. Recovery is still a long way off for Italy's leather goods and footwear sectors: in May and June, export revenue fell by 35%, retail sales by 24% and manufacturing output by 44%. Scores of orders have been cancelled, unpaid debt is mounting and nine out of 10 companies have had to resort to the furlough and financial support schemes introduced by the Italian government.
The Italian footwear sector posted slightly lower losses, but the situation remains worrying: in H1, revenue fell by 36.3% and manufacturing output by 34.9%. Exports dropped by 26.4% in volume and by 25.4% in value, down to €3.8 billion, despite the fact that average prices were up a fraction, rising 1.3%.
“The health emergency has had huge repercussions on our industry’s evolution,” said Siro Badon, president of Assocalzaturifici, the Italian footwear manufacturers' association. Badon underlined that “in addition to shrinking output and revenue, we have to deal with a decrease in consumption both in our domestic market and abroad. Household consumption has dropped by 30%, even though online purchases shot up 42% because of store closures during the lockdown period. The export situation isn’t rosy either: exports to EU markets - the destination of 2 out of every 3 pairs of Italian shoes sold abroad - lost 22% in volume, and those to countries outside the EU fell by 33.4%. There was still a trade surplus, worth €1.6 billion, but this was equivalent to a 34% shortfall.”

Footwear exports struggled on virtually all markets, with very few exceptions (as for leather goods, results were positive in Poland and South Korea). Germany, the top export market volume-wise, recorded a 17% shortfall in both volume and value. Trading with China and Hong Kong was severely affected, dropping by 31.4% and 44.1% respectively. Exports to East Asia as a whole fell by approximately 30%, both in volume and value. Significant shortfalls were also recorded by exports to CSI countries (down 37% in volume and 30% in value), to the USA, with losses of approximately 40%, and the Middle East, down 26% in volume. Export volumes to Switzerland dropped by a fourth, and those to France by a third, these two being the first and second countries for Italian footwear export values.

Domestically, all exporting regions were hit hard, the only exception being Emilia-Romagna, led by the city of Piacenza, a logistics hub that has been steadily rising in importance in recent years. The most notable shortfalls were recorded in Tuscany, where exports fell by 44%, Marche (down 32.5%), Campania (down 34%), Lombardy (down 25.1%), Veneto (down 20.2%), Puglia (down 22.2%) and Piedmont (down 20.9%).

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