Tod’s Eyes Global Growth

Italian luxury goods maker said it achieved “outstanding results” in the first half with revenues and profits posting double-digit gains.

MILAN — Italian luxury goods maker Tod’s SpA on Friday said it achieved “outstanding results” in the first half with revenues and profits posting double-digit gains on the back of strong sales of shoes and Tod’s-branded goods in all geographic markets.

This story first appeared in the August 8, 2011 issue of WWD.  Subscribe Today.

In the six-month period ending June 30, Tod’s Group — which produces shoes, leather goods and apparel — reported net profits of 65.4 million euros, or $91.8 million, a 26.7 percent increase on the year-ago period, while consolidated revenues increased 16.4 percent, to 439.5 million euros, or $616.6 million. Dollar figures are converted at average exchange rates for the periods to which they refer.

Diego Della Valle, chairman and chief executive, said sustained by the positive half-year results and based on the strong orders received for the fall collections, “I’m confident that also the second half of the year will deliver great results.” During a conference call with analysts after the results were released, Tod’s chief financial officer Emilio Macellari confirmed the group was on track to meet consensus expectations of a 12.2 percent increase in top-line growth in the second half of the year.

Tod’s — which also owns the Hogan, Fay and Roger Vivier brands — said it achieved “a strong improvement of its operating profitability” in the period, with consolidated EBITDA of 115.6 million euros, or $162.2 million, up 27.5 percent on the first-half of 2010. At 26.3 percent of sales, the operating margin increased 230 basis points over the year-ago period, driven by “the significant improvement of the industrial margin, [which is] mainly due to the more favorable product and area mix of sales,” Macellari explained. During the conference call, the cfo said that reaching a consensus 25.8 percent EBITDA margin for the second half was “feasible.”

Driving the first-half results was a 22.3 percent increase in revenues at the Tod’s brand. Sales at the unit, which accounts for 55 percent of total group revenues, to 239.7 million euros, or $336.3 million. While the group didn’t break down profit and total revenue results for the second quarter, it said Tod’s brand sales jumped 25.6 percent in the March-to-June period, powered by “outstanding results of the DOS network, in all the product categories and the geographical regions.”

In terms of product categories, sales of shoes, which account for nearly three quarters of the group’s total, rose 15.3 percent in the first half, reaching 325.5 million euros, or $456.68 million, driven by “the outstanding performance of the Tod’s and Hogan brands,” the company said. All other product categories posted double-digit sales gains in the period.

During the conference call, Macellari said from May to July Tod’s experienced an acceleration in sales, “which happened, with different volumes, all over the world.” Some regions are accelerating more than others, the cfo explained, such as Hong Kong (the best-performing market), China and the United States.

Most of Europe also put in double-digit growth, Macellari said, although Italy — the group’s largest single market, representing 51.4 percent of total revenues — grew single digits and Greece was negative.

As part of efforts to increase Tod’s group’s international reach, Macellari said the company “decided to accelerate the opening of stores in the current year,” adding that the goal was to open about 15 new units, in addition to those already in the network at the end of the first half. Asia is increasingly the focus of the group’s expansion: “90 percent of new openings will be in that part of the world,” the cfo said.

International expansion is also the strategy for Hogan, the cfo said, adding that there were no plans to open additional stores for the brand in Italy. “For a moment, with Hogan we want to avoid any kind of inflation in Italian distribution,” Macellari explained, adding: “We want it to grow internationally and into other categories, like leather goods, not just shoes.”