TOKYO — Tod’s chairman and chief executive officer Diego Della Valle, who just capped off a trip through Asia, said his company’s business is performing in line with expectations — even as consumers become more and more discerning in terms of their spending.
“We are doing well. We are in line with our budget, even a little bit better,” the executive said in an interview from the top of his group’s headquarters. Not even a torrential downpour of rain appeared to drag his spirits down. “The Japanese consumers, like those in the rest of the world, are spending money [more carefully]. I think they have divided their desire to buy the very nice things of great quality that last for a long time and the things that aren’t expensive, possibly fast-fashion, that last for a season.”
Della Valle declined to give sales figures or projections for the country. Tod’s Spa did not mention Japan in its nine-month results, released last month, but the company said in August that revenue in Japan grew in the first six months of the year despite the March 11 earthquake disaster. Tod’s said a strong yen was the main contributor to growth. It does not break out sales for the Japanese market.
The executive said he traveled to Tokyo shortly after the earthquake, and he was struck by the dignity and self-assurance of the people here amid the nuclear scare. An avid fan of Japan, the executive said he picked up good vibes on this most recent trip.
“I see people in a positive mind-set. The market is better than it was,” he surmised, adding that he thinks Tod’s fresh focus on men’s items as well as the brand’s new line of Signature embossed leather handbags will work well in the market.
Prior to visiting Japan, Della Valle traveled to Hong Kong and Mainland China to check on the brand’s fast-growing business in the region. Like nearly every other luxury goods executive, he is upbeat on the market’s prospects, but he stressed the importance of growing carefully and not opening too many stores too quickly. Tod’s currently has 25 stores in Mainland China.
“The Chinese market is a good market, very euphoric. The problem today is not about growing, because you can grow a lot. It’s about growing well, considering that in three or four years it will be a country that will stabilize a bit like the others,” he said. “I see a lot of brands arrive in China, opening stores and taking in sales from everywhere. You need to be careful, because when these markets normalize, you need to have a business model that is sustainable.”
Tod’s does not break out sales for Asia but rather lumps them together with revenue from countries outside Europe and North America. In the first nine months of the year, sales in those markets rose 37.9 percent to 139.3 million euros, or $195 million at average exchange rates for the period. Tod’s still does the bulk of its business in Europe, which accounted for more than 73 percent of its nine-month revenue figure of 699 million euros, or $978.6 million.
Della Valle said the company wants to diversify its risk and eventually have Europe, North America and Asia each account for a third of the business. But one spot on the globe hasn’t convinced him and that’s India, where Tod’s has just two stores.
“India seemed like a market in grand expansion. We all thought it would be equal to China. Some said maybe it would grow faster than China, but instead…it is very much behind for almost everyone. So it is a market that should be held in consideration but for us it is not a priority,” he said.
As for his own country and its political and economic struggles, Della Valle went uncharacteristically quiet. While he has been an outspoken critic of former Italian prime minister Silvio Berlusconi in the past, he declined to comment on Berlusconi’s resignation or discuss what he thinks Italy needs to do to get back on the track to economic prosperity.
“I’m not touching that topic. There is a good government that is working,” he said, referencing recently installed prime minister Mario Monti. “I can talk to you about moccasins, shoes to wear in parliament, bags to bring to the Senate.”
He was similarly tight-lipped when it came to the topic of Schiaparelli, a brand he bought several years ago. The fashion pack has been eagerly waiting and speculating about the relaunch of the brand, which will be celebrated next spring as part of the exhibition “Elsa Schiaparelli and Miuccia Prada: On Fashion,” at The Metropolitan Museum of Art’s Costume Institute. Della Valle said his company is working on the project but not ready to talk about it.
Similarly, the executive was vague about his intentions concerning his minority stake in Saks Inc. When asked if he plans to buy more shares, he gave a smile and a somewhat inconclusive response: “We are fine as things are. For now, we are satisfied with how it is.”
Della Valle said he is satisfied with his investment in the company thus far.
“Saks is a good investment. It’s a well-run company. We are very happy with the investment we’ve made. There is good management that I know, and so it’s an optimal investment in a market like the American one that I think will always improve.”
In the meantime, Della Valle and his brother Andrea have another issue to contend with. In November, a Naples court found the Della Valles — and numerous other people — guilty of alleged sports fraud as part of a long-running Italian investigation known as “Calciopoli.” The Della Valles, who own the Florence soccer team Fiorentina, said they are appealing the verdict. They have been sentenced to 15 months in jail, although it is unlikely they will actually serve jail time.
Della Valle once again asserted his and his brother’s innocence.
“Everything that we have to do to confirm our extraneousness we will do. There is no doubt about it,” he said. “We did not do anything, and so we hope that [the authorities] — looking at the situation well, without any [outside] pressure — recognize that.”
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