Tod’s: a lacklustre first quarter

By

Dominique Muret

Published
May 19, 2015

Tod’s Group saw a lackluster start to 2015. The commitment of significant investments in its retail network have continued to weigh heavily on the Italian luxury shoemakers accounts, which have been burdened by rising rents and labor costs associated with hiring personnel for its new stores. 

In the first three months of the year, Tod's recorded a turnover of 257.7 million euros (+1.5% at current exchange rates, -3.1% at constant exchange rates), while its Ebitda fell by 17.2% to 47 million euros and its Ebit fell by 24.2% to 35.1 million euros compared to the first quarter of 2014, the company announced in a statement.

 
"The quarter's results reflect a still challenging economic and monetary environment, with the persistent weakness of some important markets for luxury goods," said CEO, Diego Della Valle, recalling that "short term profitability has been temporarily impacted by the investments made in recent years, but we are confident we will recover it, or may even improve it, in a midterm perspective.“ 

For the 1st quarter of 2015, the group’s accessories and leather goods sales decreased by 10.4% (-15.7% at constant exchange rates) to 37 million euros due to issues with the timing of deliveries, according to Tod's. With a turnover of 204.4 million euros, footwear continued to account for the lion's share of the company’s business, with sales rising by 4.3% (-0.5% at constant exchange rates) over the same period. 

The streamlining of distribution on the domestic market and the focus on the Hogan and Fay brands have begun to bear fruit. In the first three months of the year, sales of these two brands have respectively increased by 3.7% to 68 million euros and 1.6% to 14.2 million. 

Tod’s, the group's flagship brand, on the other hand, saw its sales fall by 0.3% (-5.9% at constant exchange rates) over the same period, with a turnover of 142.3 million euros. It’s also worth noting the slowdown in the luxury footwear label Roger Vivier, the sales of which increased by 1.5% (-3.1% at constant exchange rates), as compared to a 20% increase in Q1 2014. 

All markets saw gains except for Greater China: -3.9% (-15% at constant exchange rates). With a turnover of 53.9 million euros as of March 31, the country accounts for 20% of group’s total sales.

€1 = $1.11/£0.72