While Gucci has been traipsing in the south of France for its Resort 2019 show (complete with both bridal and funeral attire and a collaboration with Los Angeles hotel and hot spot Chateau Marmont), and detailing its plans to overtake rival Louis Vuitton by way of a lift in revenue to 10 billion euros ($12 billion) up from last year’s 6.2 billion euros, the economy in its native Italy has been in swift decline. Financial markets in the Eurozone's third largest economy are inching towards what analysts are calling “a political and institutional crisis,” while the yield on bonds issued by the Italian government is rising – yields rise as bond prices fall – and thereby, suffering significant losses.
Italy’s government bonds – which are traditionally considered to be safer bets for investors than those issued by public companies due to the risk of default or bankruptcy by the latter – recovered some of their losses this past week. However, Italian government bonds are still falling behind those of some big consumer goods’ brands in value, according to Reuters. In particular, the publication notes that the bonds of “a select group of powerful global multinational companies” are proving to be investors’ best bets right now.
Among them: Ferrari and Luxottica, the latter of which is responsible for making, marketing, and distributing the eyewear of a huge array of big-name fashion brands, including Burberry, Prada, Chanel, Miu Miu, and Versace, among others.
Reuters, reflecting upon the reports of investment analysts, goes so far as to say that “Ferrari and Ray-Ban [the latter of which is owned by Luxxotica] have been deemed a safer bet than Italian government bonds” thanks to their lower yields than the government securities. Ferrari’s 2023 bond, for instance, carries a yield of 1.29 percent, lower than the 1.98 percent yield paid by an Italian sovereign bond that matures two weeks earlier. (Remember, the lower the yield, the better).
A 2024 bond from Luxottica, currently yields 0.71 percent, that is less than a third of Italy’s six-year borrowing cost of 2.26 percent thanks, in large part, per analysts, to low exposure to the domestic market in Italy.
Turns out, while Luxxotica and Ferrari are both headquartered in Italy, both do the majority of their business outside of the country. Ferrari makes just 17 percent of its sales in Italy, Reuters data shows, while just over a fifth of Luxottica’s sales are in Europe, with the majority in the United States. The same almost certainly holds true for the likes of the country’s fashion giants, as well, which derive significant revenue from the U.S., China, Japan, and the Middle East.
For those in the market for a Ferrari, London-based Yoox Net-a-Porter has not been quiet in its desire to offer the hunred-thousand-dollar Italian sports cars online. As of now, however, the Federico Marchetti-headed e-commerce giant is offering up Ferrari merchandise thanks to a multi-year agreement with the automaker.