By  on March 30, 2007

MILAN — Tod's SpA saw its 2006 net profits surge on lower costs and a more efficient production chain.

Net profits for the year ended Dec. 31 rose 23.8 percent to 66.1 million euros, or $83.3 million. Earnings before interest and taxes advanced 26.2 percent to 113.7 million euros, or $143.3 million. (Dollar figures have been converted from the euro at average exchange rates for the period to which they refer.)

As released in January, 2006 sales grew 13.9 percent to 573 million euros, or $721 million.

Tod's chairman and chief executive officer Diego Della Valle said sales so far this year are "very strong" and that the fall/winter collections have been received very well.

"I can confirm our expectations to achieve a double-digit growth in revenues and profits. I'm also happy to give to our shareholders a further increase of the dividend, while preserving the group's growth potential, thanks to our well-known sound balance sheet," he said in a statement.

Tod's said it invested 30.5 million euros, or $38.4 million, last year, up from 21.4 million euros, or $26.8 million, in 2005. Most of that capital went toward the refurbishment of stores, the relocation and expansion of the New York and Hong Kong offices and a new leather-goods plant in Tuscany. The company's net financial position was positive at 90.6 million euros, or $114 million.

Tod's and Hogan are still the biggest revenue generators for the company. Full-year sales at the Tod's brand rose 13.1 percent to 326.4 million euros, or $411.3 million, while those from Hogan climbed 23.3 percent, to 155.5 million euros, or $195.9 million.

In November, Tod's named Derek Lam as creative director. Lam, who was already designing Tod's ready-to-wear, is now overseeing the firm's handbags and shoes as well. Lam has said he wants to inject Tod's with a "sense of youthfulness and new ideas with fabrics and colors." His first full collection bowed in Milan in February; it will hit retail in July.

The company touted progress at footwear and accessories label Roger Vivier, which pegged a 69.7 percent leap in sales, to 6.5 million euros, or $8.2 million. Niche clothing brand Fay increased sales by 6.8 percent to 82.4 million euros, or $103.8 million."This glamorous and exclusive brand of luxury shoes and accessories confirms its huge growth potential and its capacity to become, in the future, a clear reference point in the world of prestigious and high-quality products," the company said.

Sales of all Tod's brands in Italy rose 15.8 percent to 279.6 million euros, or $352.3 million, and sales in other European countries advanced 8.2 percent to 145.4 million euros, or $183.2 million. Sales in North America, a much smaller market for Tod's, increased 5.2 percent to 60 million euros, or $75.6 million.

Tod's is focusing its retail expansion in Asia. The company opened 17 franchised stores last year, most of them in Asian countries. Sales in the Far East and the rest of the world rose 25.3 percent to 88 million euros, or $110.9 million.

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