By  on July 27, 2005

MILAN — Tod's posted a 21.8 percent jump in first-half revenue, but results indicate slowing sales growth in the second quarter.

For the six months ended June 30, sales rose to 236.8 million euros, or $305.5 million, from 194.5 million euros, or $239.2 million, the year before. The company said revenue would have risen 22.9 percent at constant exchange rates.

Dollar figures are at the average exchange rate.

Although sales were strong, the numbers reveal slower growth for the second quarter of the year. First-quarter sales, released in May, rose 33 percent. Tod's didn't break down second-quarter figures, but calculations indicate 8.4 percent growth.

Tod's will release first-half profits Sept. 26.

"This performance is based on the success of all our brands in all product categories," Tod's chairman and chief executive officer, Diego Della Valle, said in a statement. "These results, together with a healthy start of our winter collections in the stores, make me fully confident [we will] achieve our targets for this year."

Jacques-Franck Dossin, an analyst with Goldman Sachs, wrote in a research note that the figures confirmed "strong momentum of the core Tod's brand."

Although second-quarter sales came in below the bank's 16 percent growth forecast, the firm noted that weakness came from smaller brands Hogan and Fay. Dossin said the bank "raised the bar quite high" after a strong first quarter.

"We knew that we could have seen higher volatility in [second-quarter] sales owing to a change in timing in deliveries versus last year [anticipation of deliveries in first quarter versus second quarter compared with 2004], which we believe mostly affected Fay and Hogan as they are more dependent on wholesale sales," he said.

First-half sales rose in all markets. Sales in Italy climbed 20.2 percent to 107.1 million euros, or $138.2 million. Those in the rest of Europe increased 23.6 percent to 69.5 million euros, or $89.7 million. Revenue in North America rose 8.3 percent to 27 million euros, or $34.8 million. Store openings in China propelled a 37.2 percent sales jump in Asia and the rest of the world to 33.2 million euros, or $42.8 million.Retail sales in Tod's directly operated store network rose 17.1 percent to 121.4 million euros, or $156.6 million. The company said most of this growth was organic since the total number of stores increased by only three sales points compared with the year earlier period. As of June 30, Tod's had 105 directly operated stores.

As for the wholesale channel, the company said sales advanced 27.1 percent to 115.4 million euros, or $148.9 million.

Tod's continued to be the biggest revenue-generating brand for the group, accounting for 60.2 percent of first-half sales. Hogan generated 25.7 percent of revenue. Fay revenue accounted for 11.6 percent of sales.

Shoes continue to be the mainstay product. Footwear sales advanced 19.4 percent to 157.8 million euros, or $203.6 million. Leather goods and accessories revenue rose 33 percent to 51.8 million euros, or $66.8 million. Apparel sales increased by 15.9 percent to 26.7 million euros, or $34.4 million.

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