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(Bloomberg) -- As sales of Gucci’s snake-covered handbags and heels lead the luxury industry’s upswell, many of the brand’s Italian rivals are struggling to catch the wave.

Shares of Prada SpA, Salvatore Ferragamo SpA and Tod’s SpA have all posted double-digit declines in the past six months as profits fall, while privately held Giorgio Armani SpA is pruning its lineup after a 5 percent drop in sales last year. Their weakness contrasts with newfound strength at French rivals LVMH and Kering, whose Italian brands Fendi and Gucci are racing ahead after a multiyear slowdown in China.

Italy’s listed fashion companies “are losing market share in a more competitive category for both footwear and leather goods,” said Rogerio Fujimori, analyst at RBC Capital Markets.

The likes of Prada and Ferragamo are being punished for dragging their feet on investments in e-commerce, as well as failing to read consumer trends such as the rise of sneakers at the expense of more formal shoes. Now they’re trying to catch up by revamping their digital strategies and rolling out flashier new designs to compete with the eye-catching creations of Gucci designer Alessandro Michele.

Shareholders remain unconvinced, worried that smaller companies focusing on just one or two brands will struggle to drum up the investments or take the creative risks needed to match faster-growing rivals owned by the French conglomerates.

“The market is correctly anticipating a lower growth profile for the more mature mono-brands,” said Louise Singlehurst, an analyst at Morgan Stanley who has an “underweight” recommendation for Tod’s and Prada, and “equalweight” for Ferragamo.

At Prada’s runway show during the recent Milan Fashion Week, the brand showed off new alternatives to its staid Saffiano handbags, including accessories emblazoned with pop-art cartoons and encrusted with metal studs. 

Backstage, designer Miuccia Prada brushed off questions about whether the collection could reinvigorate the brand’s sales, which have been declining for three years.

“I don’t want to be judged by sales,” she said. “My life is so much more important than sales. I never think about that.”

Prada, the company, is more concerned about declining revenue. On a call with analysts and investors this month, Chief Executive Officer Patrizio Bertelli, who is married to the designer, outlined plans for a turnaround. He plans to shift more spending to digital communications, deepen the online selection and expand the e-commerce site to more markets, including China. The brand will also start offering more sneakers, he said.

Analysts say Prada’s troubles run deeper than digital strategy. Miuccia Prada has kept a reputation for cutting-edge designs, but the company hasn’t released enough of them. Its handbags are more expensive than similar products from Gucci and Fendi, starting at 750 euros ($885) for a solid nylon tote.

Fewer customers are willing to pay Prada’s premium, especially because some products are no longer made in Italy, MainFirst Bank analysts Nicky Cheung and John Guy said in a note. The shares have fallen 35 percent since the company’s 2011 public offering.

Ferragamo Slowdown

At Ferragamo, CEO Eraldo Poletto is under growing pressure to deliver a turnaround a year after starting the job. Revenue growth for the Florence, Italy-based maker of Vara pumps and horse-bit loafers shrank to less than 1 percent in 2016 as the brand was hit by lower tourist flows and slower growth in China.

Poletto will have to make up for years of underinvestment, as previous managers favored high margins over efforts to innovate and win new markets, according to Francesca di Pasquantonio, analyst at Deutsche Bank.

“Limited effort, especially in the past few years, has been put into the product, brand and customer experience,” Di Pasquantonio said in a note. 

Poletto has restocked the brand’s leadership with new executives and designers. But the shares are down 28 percent from their 2015 peak.

Shoemaker Tod’s tried to drum up Instagram traffic by hiring model Kendall Jenner to walk the runway at its Milan womenswear show, sporting fringed driving loafers and a white Sella handbag. 

In the absence of a creative director since designer Alessandra Facchinetti left the brand last year, Tod’s has turned to collaborations with fashion blogger Chiara Ferragni and retailers like Yoox Net-A-Porter Group SpA’s menswear site Mr. Porter. The maker of 450 euro Gommino driving shoes has said it wants to ramp up creativity and move further upmarket, even if that means pulling out of some existing points of sale. “We are on the right path, even though we need to speed up our execution plan,” Tod’s Chairman and CEO Diego Della Valle said in August. Sales were flat in the first half.

Some Italian companies, including Moncler SpA, have bucked the downtrend. And some Italian brands owned by the French conglomerates have struggled. Kering’s Bottega Veneta went silent on social media for several months this year while the brand retooled its image, while sales at the company’s Brioni suit business have remained “under pressure,” according to a recent statement.

Though French-owned Gucci and Fendi have surged lately, “we do not believe it is a question of French or Italian companies,” HSBC analyst Antoine Belge said. “It is mostly a question of management and willingness or guts to implement significant changes.”

To contact the reporters on this story: Robert Williams in Paris at rwilliams323@bloomberg.net, Chiara Remondini in Milan at cremondini@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III

©2017 Bloomberg L.P.

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