Tod’s Sales Down 2.2% in Nine Months

WWD Digital Daily - - News - BY LUISA ZARGANI

MI­LAN — “Give us time.”

This was one of the mes­sages Tod’s

Group chief fi­nan­cial of­fi­cer Emilio Ma­cel­lari de­liv­ered in com­ment­ing on the lux­ury com­pany’s per­for­mance in the first nine months of the year. “We are in­vest­ing in the new prod­ucts that can gen­er­ate a con­tri­bu­tion and vis­i­bil­ity, show­ing that the brand is ac­tive, not static, while keep­ing our qual­ity and Made in Italy ex­cel­lence, but give us time,” Ma­cel­lari said dur­ing a call with an­a­lysts on Wed­nes­day after the group re­ported a 2.2. per­cent de­crease in rev­enues in the pe­riod to Sept. 30.

In the nine months, sales to­taled 706 mil­lion eu­ros, com­pared with 722.2 mil­lion eu­ros in the same pe­riod last year. At con­stant ex­change rates, they were flat, up 0.1 per­cent.

“To­day’s re­sults were broadly in line with our ex­pec­ta­tions,” stated Diego Della Valle, chair­man and chief ex­ec­u­tive of­fi­cer of the group. “We are in the process of de­liv­er­ing to our stores the projects launched a few months ago. In these days, the ini­tial ef­fects of the new busi­ness model that will sup­port our fu­ture growth [Tod’s Fac­tory] are start­ing to be vis­i­ble and, from now on, new prod­ucts will ar­rive in stores ev­ery two months, sup­ported by strong and proper mar­ket­ing and com­mu­ni­ca­tion plans,” said the en­tre­pre­neur of the new strat­egy that will see drops through­out the year.

“The new store for­mats are ready and the re­lated open­ing plan is on track. These are in­no­va­tive and right con­cepts for the ‘new con­sumer,’ who asks for an om­nichan­nel ser­vice. Con­sis­tently, our e-com­merce is grow­ing a lot, and it will be able to grow even more, at full speed,” ex­plained

Della Valle. “Our man­age­ment team is al­most com­plete, and I be­lieve that it has al­ready the re­quired skill set to achieve our goals. We have to face a pe­riod of hard work, pay­ing at­ten­tion to the con­tin­u­ous evo­lu­tion of world mar­kets, which will never re­flect the same con­di­tions we were used to op­er­ate in in the past.”

Della Valle said he be­lieves there are now “im­por­tant op­por­tu­ni­ties to grab and we want to de­vote all the needed en­ergy and fi­nan­cial re­sources to achieve a solid and last­ing growth for our group.”

Cur­rency fluc­tu­a­tions af­fected the per­for­mance of the Tod’s and Roger

Vivier brands, which have the high­est pres­ence abroad.

In the nine months, sales of the Tod’s brand were down 3.1 per­cent to 376.3 mil­lion eu­ros. Ma­cel­lari said the brand recorded a healthy start of the fall sea­son, across all prod­uct cat­e­gories, with the ar­rival of new projects in stores, such as the No-Code pro­ject. “The No-Code is the first one in sell-outs since it hit stores, it’s par­tic­u­larly strong, and it’s a clear ev­i­dence we un­der­stood the di­rec­tion the mar­ket wants us to take,” said Ma­cel­lari, who was cau­tious about pre­dict­ing re­sults.

“We wait and see the re­sults. I am con­fi­dent re­sults will come, but I can­not as­sure you they will come in two or five weeks,” he said, pressed by an­a­lysts. “We are in the right di­rec­tion, but we need more time. And we un­der­stand it can take more time than ex­pected al­though the first signs are surely pos­i­tive. I pre­fer to prom­ise less and de­liver more.”

Re­spond­ing to one an­a­lyst who con­tended that Ma­cel­lari did not sound pos­i­tive about the changes, the ex­ec­u­tive on the con­trary said he did not doubt the suc­cess. “We are do­ing all that is log­i­cal and pos­si­ble to achieve and de­fend our po­si­tion,” he said, urg­ing to fo­cus on the long-term and not the sin­gle quar­ter or even year. “We need time to col­lect re­sults.” He also pointed to the new cap­sule with Alessan­dro Dell’Ac­qua, which is “gen­er­at­ing in­ter­est in the brand and ad­di­tional sales.”

Ma­cel­lari echoed Della Valle’s re­marks on in­creased com­pe­ti­tion. “Nowa­days, when all of the main fash­ion groups have fo­cused their at­ten­tion on the prod­uct cat­e­gories that tra­di­tion­ally rep­re­sent our core busi­ness, to ob­tain ex­cel­lent re­sults our prod­ucts must be spe­cial, in­no­va­tive and sup­ported by a strong mar­ket­ing and com­mu­ni­ca­tion cam­paign, which can pro­vide us with strong global vis­i­bil­ity,” Della Valle said. “This is why I have in­structed my man­agers to in­vest as much as is needed to sup­port our growth goals as quickly as pos­si­ble.”

Ma­cel­lari said the com­pany is in­vest­ing in prod­uct, sam­ples, de­sign, re­search, pro­mo­tion ac­tiv­i­ties, mar­ket­ing and com­mu­ni­ca­tion to sup­port the new course of the com­pany. In­vest­ments are in the range of 9 per­cent of sales.

Asked about Della Valle’s re­cent de­nial of re­ports he was con­sid­er­ing a sale of the com­pany, fol­low­ing a re­struc­tur­ing of his hold­ings, Ma­cel­lari said the busi­ness ti­tan “thinks the com­pany is un­der­val­ued, the share price does not re­flect the value of the com­pany. It’s log­i­cal, for some­one who has very high con­fi­dence in what can be achieved to see the share price at not the ideal level. It’s most prob­a­ble that the fam­ily can de­cide to in­crease [the stake] in the com­pany, not di­vest.”

In the pe­riod, Ho­gan rev­enues inched up 0.9 per­cent to 159.3 mil­lion eu­ros and showed solid dou­ble-digit growth in Europe and China.

Sales of Roger Vivier de­creased 3 per­cent to 127.4 mil­lion eu­ros, slowed by the weak­ness of some mar­kets dur­ing the sum­mer months, but show­ing sig­nif­i­cant signs of im­prove­ment in re­cent weeks. The com­pany ex­pressed con­fi­dence about the end of the year, point­ing to the “ex­cel­lent ac­cep­tance” of the prod­ucts by new de­signer Gher­ardo Fel­loni, which are now ar­riv­ing in the stores.

Ma­cel­lari ad­mit­ted Vivier suf­fered a bit in the third quar­ter but said there was ab­so­lutely no worry, “it’s not a trend.”

The brand’s rep­u­ta­tion has not changed at all, and the com­pany is turn­ing down of­fers to open stores and to sell to more whole­sale ac­counts to keep the ex­clu­siv­ity of the la­bel. “The de­mand of the prod­uct is much higher than we want to meet. Once you an­nounce a new de­signer, there is a phys­i­o­log­i­cal drop of sales at the end of the pre­vi­ous de­signs. There is cu­rios­ity for a new prod­uct. The ac­cep­tance of Fel­loni’s de­signs is good, the at­ten­tion is high, and there is no is­sue,” Ma­cel­lari said. While say­ing he had “noth­ing against” for­mer cre­ative di­rec­tor Bruno Frisoni, he said clients were ask­ing for new­ness.

The Fay brand was down 2.8 per­cent to 43.5 mil­lion eu­ros, re­flect­ing the weak­ness of the do­mes­tic mar­ket, mainly in the whole­sale chan­nel.

By cat­e­gory, shoes were down 2 per­cent to 562.2 mil­lion eu­ros. At con­stant ex­change, sales were up 0.3 per­cent. The ap­par­ent slow­down in the third quar­ter was al­most en­tirely due to the dif­fer­ent tim­ing of the de­liv­er­ies of the whole­sale chan­nel, said the com­pany.

Sales of leather goods and ac­ces­sories to­taled 96.1 mil­lion eu­ros, down 3.7 per­cent, but the fall col­lec­tion reg­is­tered a healthy start.

Rev­enues of ap­parel were down 1.8 per­cent to 47.1 mil­lion eu­ros, broadly re­flect­ing Fay’s per­for­mance.

In the first nine months of 2018, do­mes­tic sales were 217.5 mil­lion eu­ros, a 4.4 per­cent de­crease, show­ing a per­sis­tent weak­ness. nIn the rest of Europe, rev­enues to­taled 184.4 mil­lion eu­ros, inch­ing up 0.8 per­cent. In the Amer­i­cas, sales amounted to 53.1 mil­lion eu­ros, down 7.8 per­cent. At con­stant ex­change, they were down 1 per­cent.

Rev­enues in Greater China de­creased

1.7 per­cent to 152.5 mil­lion eu­ros, but were up 3 per­cent at con­stant ex­change. The com­pany re­ported pos­i­tive re­sults in main­land China, which rep­re­sented about 60 per­cent of this re­gion, in Hong Kong and in Ma­cau. Ma­cel­lari said main­land China was pos­i­tive even if there was a slow­down in the third quar­ter, par­tially due to a lack of as­sort­ment in stores but that can be re­cov­ered now that new prod­ucts are ar­riv­ing. “We re­main pos­i­tive that by the end of the year it will be bet­ter than in the nine months,” he said.

Fi­nally, in the Rest of the World area, sales inched down 0.5 per­cent to 98.5 mil­lion eu­ros.

Sales through di­rectly op­er­ated stores de­creased 3 per­cent to 436 mil­lion eu­ros. Like-for-like sales were down 2.1 per­cent. Ma­cel­lari was cau­tious about the 2018 con­sen­sus. He de­fined the im­prove­ment in like-for-like “pale” and if the trend con­tin­ued in the last quar­ter, it could im­pact year-end fig­ures. The month of Oc­to­ber was in line with the first nine months, he said.

The lux­ury group’s man­age­ment urged to think long term to reap re­wards from in­no­va­tive changes.

De­tails at the Tod's springshow.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.