Tod’s Sales Fall 4.1% in 2017
MILAN — Tod’s Group is putting 2017 behind and eyeing a year of transition. The Italian luxury company on Wednesday reported preliminary sales of 963.3 million euros in the 12 months ended Dec. 31. This was a 4.1 percent decrease compared with one billion euros the previous year, but Tod’s said it registered an uptick in the last quarter of 2017. At constant exchange rates, revenues were down 3.1 percent.
“Today’s results are in line with our expectations and they highlight improvements in the last part of the year,” said chairman and chief executive officer Diego Della Valle, emphasizing the strong performance of the Roger Vivier brand. “As mentioned during the investor day, 2018 will be a year of transition: The managers’ team has changed a lot and has begun to operate; I believe that in the second part of the year we will begin to see the results of their work. We want each brand to fully respect its values and its DNA, offering products that are totally consistent with its own history of Made in Italy and craftsmanship, with a strong component of innovation and creativity, absolutely essential for attracting new consumers.”
In November, Tod’s said Umberto Macchi di Cellere, previously managing director worldwide sales for all product categories for the Bulgari brand, would join the group as managing director, succeeding ceo Stefano Sincini, who is leaving after 33 years with the company. As reported, Della Valle shortly after squelched rumors that he was relinquishing his role within the Tod’s Group. Asked to comment on a Reuters report following a Tod’s investor day in November, and based on two sources speculating the chairman and ceo is “reviewing his role” with plans to “step aside,” a spokesperson for the Italian luxury group refuted this. “Nobody knows when and if this will happen. Mr. Della Valle said that when the management will be in place, when the time will be right, when it will be opportune, one day” he may consider this, explained the spokesperson at the time.
Commenting on year-end results after trading hours in Milan, where Tod’s is publicly listed, Della Valle reiterated the group’s focus on digital communication and trade. “We deem encouraging the double-digit growth that we are registering, which makes us confident for an even wider development of this channel, which shows its strong potential, also considering that in some markets traditional distribution will tend not to grow. The development of our DOS network remains key, in particular the attention to the like-for-like growth that, when everything will be fully operational, will definitely contribute to the achievement of our targets. We believe that, with the fall season, our production structure can finally be considered fully operational, at the highest quality level, ready to satisfy a demand, which we expect to be higher and higher. We have defined new store formats and a pop-up store project, which we will run around the world, in some cases in collaboration with our partners. Therefore, I’m confident that we can think of the future in a very positive way.”
In 2017, sales of the core Tod’s brand were down 7.7 percent to 515.7 million euros, mainly dented by the footwear category, also penalized by some delays in deliveries, which occurred at the start of the season and were not recovered. Hogan revenues decreased 4.8 percent to 203.9 million euros, hurt by the weakness of the Italian market. Roger Vivier was up 7.8 percent to 179.3 million euros in sales, showing growth in all main markets. Sales of Fay grew 1.4 percent to 63.5 million euros, with a positive performance in Italy and in Europe.
Footwear was down 4.2 percent to 757.9 million euros, affected by the weakness of the wholesale channel, but the company said the category was “showing a visible improvement in the fourth quarter.” Sales of leather goods and accessories totaled 135.8 million euros, down 4.7 percent. Apparel reflected
Fay’s performance, and was in line with the previous year, inching up 0.5 percent to 68.7 million euros.
Sales in Italy decreased 4.3 percent to 298.2 million euros, impacted by the weakness of the wholesale channel, mainly in secondary cities. In the rest of Europe, revenues were down 2 percent to 245.1 million euros, dented by the weak wholesale channel. In the Americas, sales dropped 19.3 percent to 78 million euros. Revenues in Greater China edged up 0.8 percent to 212 million euros. At constant exchange, sales in that region were up 3 percent. Mainland China, which represents more than half of this region, registered positive results; Hong Kong and Taiwan are still negative but are showing “some timid signs of improvement,” the company said. In the Rest of the World area, revenues were down 4.1 percent to 130 million euros. In the fourth quarter of the year, Japan recorded a strong improvement, while the Korean market remained difficult.
Sales from directly operated stores were down 1.5 percent to 621.1 million euros. Like-for-like sales at constant exchange were down 2.8 percent in the fiscal year. As of Dec. 31, the group counted 275 directly operated stores and 112 franchised stores.
Revenues to third parties totaled 342.2 million euros, down 8.4 percent from the previous year, hurt by the weakness of important markets such as Italy and the U.S.
Tod’s wholesale channel and its core footwear category, also impacted by some delays in deliveries, dented the group’s performance.