MILAN — Italian luxury group Tod's SpA on Wednesday posted double-digit revenue growth in 2007 despite a slowdown in retail sales and the underperformance of leather goods and accessories in December.
Buoyed by strong demand for high-quality footwear in Italy and the rest of Europe, Tod's preliminary sales for the 12 months ended Dec. 31 grew 14.7 percent to 657 million euros, or $900.6 million at average exchange.
Tod's chairman and chief executive officer Diego Della Valle said he expected full-year profitability to be above the results achieved in the first nine months of 2007. However, he cautioned profits would likely be below company expectations, "due to the deceleration of retail sales in December and to the unfavorable exchange rates."
Net profits for the nine months ended Sept. 30 rose 8.9 percent to 57.3 million euros, or $76.8 million. Sales for the period advanced 14.1 percent to 499.9 million euros, or $670 million.
Tod's is slated to release full-year 2007 profits on March 28.
Looking to the current year, Della Valle remained optimistic, citing "very positive results" in all product lines for sales of spring 2008 collections.
In 2007, the Tod's and Hogan brands continued as the group's engine, providing over four-fifths of revenues. Sales of the company's eponymous brand rose 6.5 percent to 347.6 million euros, or $476.5 million, while sales at Hogan rose 28.3 percent to 199.5 million euros, or $273.5 million.
The group's niche brands also performed well. Revenues at apparel brand Fay increased 9.2 percent to 89.9 million euros, or $123.2 million, while sales at luxury shoemaker Roger Vivier almost tripled to 16 million euros, or $21.9 million.
Revenues from shoes hit 427.1 million euros, or $585.4 million, an increase of 19.5 percent in 2006.
However, a disappointing Christmas season and a strong euro undermined sales of leather goods and accessories, the company said, without going into detail, although it did note the Pashmy fabric bag collection had performed well. Sales of leather goods and accessories advanced 4.2 percent to 139.2 million euros, or $190.8 million.
Revenues from apparel rose 10.2 percent to 89.2 million euros, or $122.3 million.Geographically, sales in Italy, Tod's biggest market, climbed 19.3 percent to 333.4 million euros, or $457 million. Revenues in other European countries increased 10.6 percent to 160.8 million euros, or $220.4 million. The strong euro bit into sales growth in the United States and Asia. The company noted revenues in the U.S. rose 10.4 percent to 66.3 million, or $90.9 million, but would have climbed nearly 20 percent at constant exchange rates.
Sales in Asia and the rest of the world were 96.5 million euros, or $132.3 million, up 9.6 percent or 17.2 percent at constant exchange rates.
By channel, group revenues were almost evenly split across directly operated stores (DOS) and third-party retailers.
DOS sales rose 12.3 percent to 318 million euros, or $435.9 million, driven by organic growth in existing stores and by 15 openings in 2007, Tod's said. Same-store sales grew by a similar percentage. Revenues from franchised stores and independent retailers totaled 339 million euros, or $464.7 million, up 17 percent.
At Dec. 31, Tod's distributed its products via 125 DOS and 63 franchised stores.
The company released the sales figures after the end of trading on the Italian stock market Wednesday. The share price closed down 1.7 percent to 39.99 euros, or $59.08. It has lost almost a third of its value in the last three months.
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