Roger Vivier, Tod’s Drive Parent Group Profits, Sales in H1 Above Expectations
● The outlook for the rest of the year remains positive, while a search for a successor to creative director Walter Chiapponi is underway.
MILAN — The Tod's Group closed the first half of the year with growth in profitability and revenues above expectations, boosted by the Tod's and Roger Vivier brands, which Diego Della Valle, chairman and chief executive officer, said were “particularly brilliant.”
In the six months ended June 30, net profit climbed to 30.9 million euros, compared with 800,000 euros last year, on the back of sales that rose 21.7 percent to 569.1 million euros, versus 467.5 million euros the first half last year.
Della Valle underscored that in the period, operating profit was three times higher than in the first half last year, reaching 60.3 million euros compared with 17.7 million euros.
Earnings before interest, taxes, depreciation and amortization totaled 138.8 million euros, with a 24.4 percent margin on sales, five percentage points higher than last year.
Gross margins were fueled by a more favorable mix of product, geographies and channels, which were all accretive, said chief financial officer Emilio Macellari during a conference call with analysts on Wednesday evening at the end of trading in Milan, where the company is publicly listed. The group also controls the Hogan and Fay brands.
Della Valle touted the “craftsmanship and style” of Tod's and Vivier products, highlighting the “growing consensus” from consumers “who are very attracted by the great quality, refinement and desirability of our brands.”
Della Valle said the group continues "to invest in the supply chain, with a hiring plan dedicated to young people, to work alongside our expert artisans, to protect the precious know-how of our company and guarantee the highest possible quality of our products."
Despite the uncertainties and volatility of the macroeconomic context at an international level, the group's solid results, "the good quality of the management team and the excellent feedback received from the next collections make me confident about our future results, in terms of growth in sales and profitability,” concluded Della Valle.
Asked to comment on current trading, Macellari said that the growth rate in July and August “continued, but normalized” compared to “a more aggressive growth in the previous months, but it was still a good performance, with July particularly positive.”
There was also a normalization in the Chinese market, due to “worries generated by the macroeconomic situation in the country and in real estate, affecting the lower end of the market.” Japan showed the highest growth rate while Korea was the weakest, registering a slowdown triggered by uncertainties. The U.S. was “not particularly brilliant,” but Macellari noted that the American cluster remains strong as spending has largely shifted to outside the country.
September is “still good,” he said.
“We are not concerned by the current situation.”
In the first half, sales in Italy rose 12.2 percent to 122.9 million euros and revenues in Europe climbed 14 percent to 116.7 million euros.
Local and tourist spending fueled the two regions, said Macellari.
Sales in the Americas dipped 1.8 percent to 37.2 million euros.
Revenues in Greater China soared 43.2 percent to 194.4 million euros, as the lifting of COVID-19 restrictions continued.
Hong Kong and Macao performed “particularly well,” said Macellari, as did Japan.
Sales in the Rest of the World area rose 19.3 percent to 97.9 million euros.
Roger Vivier and Tod's, which have the greatest presence abroad, outpaced the group gains, rising 28.4 percent to 152.5 million euros and 21.3 percent to 283.3 million euros, respectively. Vivier is expected to be a strong driver of profitability also in the second half, said Macellari.
Asked about a succession plan at Tod's following the exit of creative director Walter Chiapponi revealed in July,
Macellari said that the designer was leaving at the end of his contract for personal reasons and that Tod's had “selected potential names, but there is still time,” as Chiapponi will stay in place until the end of September.
“He did a very good job, led the internal design team of more than 50 and contributed to launch good [styles],” said Macellari, expressing his confidence in ripple effects for the future. “We are not in favor of a star creative director, we believe in teamwork, coordinated by one interpreter of our DNA and we are aiming for someone who can continue Walter's work with the same attitude, in an evolution, not a revolution, in line with Walter's approach.”
In the first half, sales generated by Fay rose 19.8 percent to 23.5 million euros and Hogan rose 14.3 percent to 108.5 million euros.
By category, sales of shoes rose 18.9 percent to 439.3 million euros.
Sales of leather goods and accessories climbed 32.9 percent to 95.4 million euros. The strength of the leather goods category is also driving higher margins, given an average price three times that of a pair of shoes, said Macellari. Apparel was up 28.7 percent to 33.1 million euros.
While more significant investments in communication are earmarked for the second half, Macellari said he believed the consensus of 2023 sales of 1.14 billion euros “can be met” as that of an operating profit of 85 million euros.
In the first half of 2023, the group invested 21.3 million euros in tangible and intangible fixed assets, compared with 17 million euros of the first half of 2022, mainly channeled into the expansion and renewal of the directly operated stores network and the development of digital. In the second half, communication will be fueled by increased investments of an additional 10 million to 15 million euros, on top of the amount spent in the first half, said the CFO.
As of June 30, the net financial position was negative and equal to 592.7 million euros compared to a net debt of 574.3 million euros at the end of June last year.
Asked about a previously announced potential capital markets day, Macellari said it could take place “very likely” at the end of the first quarter next year, when “hopefully there will be a less uncertain macro-scenario.”