JetSet

Published on May 4th, 2016 | by Daniel Sherman Fernandez

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Ferrari’s Luxury Ambition Does A ‘U’ Turn

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Ferrari’s ambition to compete with luxury-goods brands like Hermes or Prada has failed to make headway in the past 6-months since its initial public offering, raising pressure on the new board to reset the supercar maker’s strategy.

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Skepticism over the company’s prospects has caused the stock to tumble about 20% since its October 2015 listing. The new board of directors, loaded with luxury experts, must address the challenge of pouring resources into its mainstream cars, maintaining the pricey presence in Formula 1 racing and extending the brand into more high-end products, all without the financial muscle of a strong parent company.

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Ferrari’s sluggish start as an independent company coincides with a rough time for the luxury-goods industry. The terrorist attacks in Paris and Brussels deterred hard-spending tourists from Asia and the Middle East to major European cities, compounding already sagging demand in China.

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The effects have already been felt with top tier luxury brands like LVMH, Burberry Group and Prada, the worst-performing major luxury stock over the past three years, with its shares down by 29%.

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