Tod’s Reports Robust Growth in Q1
● Tod’s Group delivered doubledigit growth in the first quarter, but COVID-19 lockdowns in China continue to weigh on business in the region.
LONDON — Tod’s Group delivered double-digit growth in the first fiscal quarter across all product categories and geographic regions with the exception of China, where COVID-19 lockdowns continue to weigh on business.
In the three months ended March 31, sales at reported exchange rates rose 23 percent to 219.6 million euros year-overyear. At constant exchange rates, sales were up 20 percent to 214.4 million euros.
All of the group’s brands, Tod’s, Hogan and Fay, notched double-digit growth. The only exception was Roger Vivier, which grew in the single digits due to its wider exposure to the Chinese market.
Sales at Vivier rose 8 percent at reported rates to 52.4 million euros, and 4 percent at constant rates to 50.6 million euros.
Tod’s, the group’s biggest brand, was the top performer in the period, rising 36 percent at reported rates to 104.6 million euros, and 33 percent at constant rates to 101.9 million euros.
By region, the Americas showed the strongest growth, with sales climbing 68 percent at reported rates to 15.7 million euros, and 59 percent to 14.9 million euros at constant exchange.
Diego Della Valle, the group’s chairman and chief executive officer, said own-store revenues were particularly good in the period and higher compared with the first quarter of 2019 thanks to investments in the distribution network and a targeted communication, marketing and CRM (customer relationship management) policy.
He said the company is still waiting to assess the impact of the war in Ukraine and the lockdowns in China. In the meantime, it continues to invest in the individual brands and to focus on maximizing their value, and the value of the group as a whole.
“We also hope that this tragic war can end as soon as possible, restoring peace to all people,” Della Valle added.
Business is bouncing back, especially in the U.S. and Europe. The latter region saw sales increase 29 percent to 48.4 million euros at reported rates, and 27 percent to 48 million euros at constant rates.
In the first quarter, sales in Italy were up 17 percent to 50.9 million euros. Tourism from countries in Asia continues to weigh on growth in the country, and on the European market generally.
Sales in Italy, the group’s largest market, are still below 2019 levels, which the company said was due to the decline in tourism; the planned reduction of the wholesale business, and consumer sentiment, which has been impacted by the war in Ukraine.
During the call, Emilio Macellari, the group’s chief financial officer, said China posted robust growth in January and February, but sales softened as soon as lockdowns were imposed in mid-March.
He added that 30 percent of the brand’s stores remain shut in the region. To exacerbate matters, the Tod’s Group’s distribution center is located in Shanghai, where lockdowns are still in effect.
He said it’s impossible to deliver goods to other parts of China and fulfill e-commerce orders. The market, he said, remains profitable.
“We don’t know how long those stores will be closed, so we cannot say whether the second quarter will be positive for us in China,” Macellari said in response to persistent questions by analysts about future sales in the region.
Pressed on the China question, he said sales declines could potentially be as much as 40 percent in the second quarter.
“However, if stores open by June, we can revise those projections,” he said, adding that growth in the rest of the world remained strong and the China closures would not jeopardize the group’s full-year performance.
By contrast, sales in Japan and South Korea exceeded 2019 rates in the quarter, while U.S. retail stores and e-commerce channels have been delivering “magic,” he said.
The company confirmed that the full-year sales consensus of 970 million euros, and the EBIT margin of 5 percent is within reach if sales in China do not decline further. Macellari said the hope is that once lockdowns in China lift, sales will rebound quickly.
Sticker prices, which have been rising 2 to 3 percent in line with inflation, will increase even more due to swelling worldwide rates. Macellari said prices this year will rise 5 to 6 percent on average.
Barclays noted the 219.6 million euro sales figure was 8 percent above its top-line estimates and 6 percent above Bloomberg consensus, with the group returning to “above pre-pandemic sales” in this quarter.
Macellari also talked about the recent Tod’s campaign featuring Chiara Ferragni after one analyst pointed out that Ferragni was a board member and was not originally supposed to do any marketing for the brand.
The Tod’s Generations campaign, unveiled last week, showcases Ferragni and her family — her mother Marina Di Guardo and sisters Valentina, who designs a jewelry line, and Francesca — is meant to reflect family values and the Italian lifestyle.
Photographed by Sean Thomas in a villa and its gardens on Lake Como, the women are seen posing in Gommino loafers and carrying the Bow bag.
Macellari said it was not a fullblown brand campaign, but a way of communicating the Tod’s values and the cross-generational appeal of the product. He noted that Ferragni posted a video on her Instagram feed but there would be no other major promotion.
Ferragni counts some 26.9 million Instagram followers and often shares family moments on social media, including life with her two toddlers and her husband, the Italian rapper Fedez.
Last April, in a bid to appeal to a younger consumer, Tod’s Group appointed Ferragni as a member of its board of directors — a move that led to the company’s shares spiking on the Italian Stock Exchange.
Tod’s Group shares closed up 6 percent to 33.64 euros on Wednesday. The firstquarter results were released after the close of the Milan Stock Exchange.