Ferragamo to raise prices in Europe Salvatore Ferragamo expects to raise retail prices in Europe in the "low single digits" over the next months as the Italian luxury goods brand joins rivals in responding to the impact of the surge of Chinese consumer tourists into the region. Raising prices for luxury goods sold in Europe has become a key issue for industry executives as tourists, the majority of them Chinese, make up as much as 70 per cent of sales of high-end wares in European cities. Those travellers have put pressure on the forecast margins of luxury goods companies by choosing to shop in Europe. Typically, luxury goods are a third cheaper in the region than in China, where local taxes help to inflate prices. In an interview with the Financial Times, Michele Norsa, chief executive, said Ferragamo would be following moves by the world's largest luxury goods group LVMH and would raise prices over the next weeks in Europe on products most likely to be bought by tourists, such as handbags and shoes. LVMH raised their prices by 8 per cent. We will have some low single-digit price increases," Mr Norsa told the FT at Ferragamo's headquarters in a castellated palazzo on the River Arno in Florence. Ferragamo, among Italy's best known brands, has been one of the success stories of the luxury goods industry since it listed a quarter of its shares in Milan in June 2011. Since then, the shares have risen 65 per cent, proving a rare example of how family capitalism can survive on the stock market. The company was founded in 1927 in Florence by Salvatore Ferragamo, who became a shoemaker to Hollywood stars. More than 70 per cent of the company is still owned by his wife, Wanda, and descendants. Analysts credit the family's decision to hire an outside manager in Mr Norsa, an executive with experience at other family firms Valentino and Benetton, as crucial to its success. Ferragamo's focus on pricing for tourists comes as the company, along with other luxury goods groups, reported slowing sales in China in the third quarter. Analysts have become more cautious about the company's outlook amid concerns that the brand faces slower growth especially in the main Chinese cities. Its retail sales in China grew 7.7 per cent in the third quarter, a shallower rise than a year ago, while wholesale sales fell 16 per cent. Tourist purchases buoyed Europe and the US where sales grew 16 per cent and 13 per cent respectively. Mr Norsa acknowledges the third quarter slowdown. But he says that after travelling in China, London and Paris over the last weeks, "the feeling for luxury is definitely good," with signs of improvement going into the new year, buoyed by shopping by tourists. It is a big opportunity because people are looking for gifts all year round now. It is not only Christmas any more but it is Chinese New Year and there is Ramadan, and there is Golden Week and then there is Silver Week," he says. Gifting in Europe may be going down, but in Asia it is just getting more and more important. The surge in tourist consumers has upended business models in the luxury goods industry, with companies now having to tailor their stores and products to this affluent travelling class. Ferragamo is focusing on renovating stores in major tourist destinations. It recently reopened two stores in London's Old Bond Street and Sloane Street. Mr Norsa said footfall has since increased as much as 70 per cent in the stores. This year, Ferragamo plans to renovate stores in Frankfurt, Zurich, Vienna, Milan and Rome. The store reopenings in London come amid a debate about the differing fortunes of luxury goods groups with prestige leather goods-focused brands such as Hermès and Prada continuing to produce strong sales, while other brands, often with lower prices or more focused on clothes, are performing less well. Mr Norsa says on the evidence seen by Ferragamo, leather goods companies "are favoured because of the increase in travellers and those travelling tend to be limited in what they can buy because of cabin space." Keeping up appearances for the travelling classes is also causing the company to reconsider how it runs its stores, particularly those in airports or more far-flung destinations where a franchisee has traditionally operated. In the past year, Ferragamo has opened stores in places as varied as Bogotá and Baku. This year, we are working on a plan to take back some sub-franchisees in China. The goal is always to maintain our image. We are also looking at some specific markets where we could also take our business. Brazil could be such an opportunity," he says.