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Tod’s Full-Year Profits, Sales Rise 7.8%

The group was boosted by strong gains in the U.S. and Asia and led by sound growth at its Tod’s and Roger Vivier brands.

MILAN — Tod’s SpA reported a 7.8 percent increase in net profits for the year ended Dec. 31, boosted by strong gains in the U.S. and Asia, which balanced decreasing revenues in Italy, and led by sound growth at its Tod’s and Roger Vivier brands.

Profits rose to 145.5 million euros, or $186.2 million, compared with 135 million euros, or $187.6 million, in 2011. Sales grew 7.8 percent to 963.1 million euros, or $1.23 billion.

Dollar amounts have been converted at average exchange rates for the periods to which they refer.

Diego Della Valle, chairman and chief executive officer, said, “2012 figures confirmed the excellent results registered last year, despite the challenging domestic market and the impact of our strategic decision to make our Italian wholesale distribution even more selective, in order to preserve our brands’ exclusivity and positioning, and to protect the very strong quality of our credit portfolio.”

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In light of initial strong retail sales of the group’s spring collections, Della Valle said he was confident “that also in the current year our group will keep its growth trend, driven by the success of our products in all the international markets.”

Sales at the core Tod’s brand rose 16.8 percent to 569.7 million euros, or $729.2 million.

Sales of the Hogan and Fay brands dropped 13.3 and 15.2 percent, respectively, hurt by their exposure in a lackluster national market and a rationalization of their Italian wholesale distribution. The group is expanding Hogan internationally, including through high-profile collaborations with Karl Lagerfeld and stylist Katie Grand. Tommaso Aquilano and Roberto Rimondi were tapped in 2011 to develop the Fay brand. Their first collection bowed for spring 2012.

 

Roger Vivier sales more than doubled, reaching revenues of 74.5 million euros, or $95.3 million.

The group’s core footwear category showed a 9.9 percent rise in sales, which reached 710.4 million euros, or $909.3 million.

Leather goods and accessories grew 14.2 percent to 165.5 million euros, or $211.8 million, while apparel decreased 15.1 percent to 86.2 million euros, or $110.3 million, reflecting the performance of the Fay brand.

The Italian luxury company has been focusing on markets with high growth potential outside Italy, mainly in Asia. As a consequence, exports accounted for 60.2 percent in the year, compared with 49.7 percent in 2011.

Sales in Italy decreased 14.5 percent to 383.9 million euros, or $491.4 million. Europe excluding Italy posted a 10.1 percent increase in sales to 200.3 million euros, or $256.4 million.

The U.S. grew 30.8 percent to 81.6 million euros, or $104.4 million, despite the significant impact of Hurricane Sandy in the last quarter.

 

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Asia and the rest of the world totaled 297.3 million euros, or $380.5 million, up 48.7 percent. During a conference call with analysts, chief financial officer Emilio Macellari pointed to the “outstanding” performance in Greater China, which accounted for about 19 percent of total sales. The group operates in the area with 54 directly operated stores and three franchised units. Macellari also singled out Korea and Japan as relevant, growing markets in the area.

In 2012, revenues to third parties totaled 389 million euros, or $498 million, down 7.2 percent due to the rationalization of the Italian wholesale distribution. Sales in directly operated stores rose 21.1 percent to 574.1 million euros, or $734.8 million, through the expansion of the group’s retail network and through strong organic growth, and represented 59.6 percent of total sales.

At the end of December, the group had 193 directly operated stores and 78 franchised units, compared with 176 directly operated stores and 70 franchised boutiques at the end of 2011.

Macellari indicated that the company in the first half of 2013 is “expecting not a particularly favorable semester, the first quarter being the most impacted as the most wholesale-oriented of the year.” He said “a 7.5 percent increase for the top line is the consensus for 2013. It’s challenging, but achievable assuming that the situation of the market remains as today.”

In 2012 the group invested a total of 49.9 million euros, or $63.9 million, in tangible and intangible fixed assets, compared with 42.6 million euros, or $59.2 million, the year before. In 2011 capital expenditures were increased by 19.3 million euros, or $26.8 million, earmarked for the restoration of the Colosseum in Rome. In 2012 most of the investments were aimed at the widening and refurbishment of the store network, the update of industrial and production structures and the development of the company’s software.

Separately, Della Valle told Bloomberg that following Italy’s elections last month, which left a hung government but ousted established politicians from parliament, top bankers must follow. “It’s clear that people said, ‘That’s enough, it’s time to change, show us a decent country.’ That also has to happen in the world that we represent, finance and business, and the civil society that guides the country.”

The entrepreneur has been vocal about shaking the status quo in the country. In 2011, Della Valle, who sits on the board of giant insurer Assicurazioni Generali SpA, initiated a shake-up of Italy’s financial world, a tightly knit clique established and consolidated over the years, leading to the resignation of Cesare Geronzi as president of Generali. “These are people who put in their time without producing anything interesting for a serious country. We have to take the situation in hand and start saying with a nice, big chorus of voices capable of breaking through to these people, ‘Stop it, please, step aside because you have already caused enough trouble for the country,’” Della Valle told Bloomberg.