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Tod’s SpA Reports Net Profit Up 7%

Tod’s SpA posted quarterly gains fueled by store openings and strong sales across its stable of brands.

MILAN — Tod’s SpA posted quarterly gains fueled by store openings and strong sales across its stable of brands.

The Italian luxury group, which owns Tod’s, Hogan, Fay and Roger Vivier, said net profit for the period ended March 31 advanced 7 percent to 20.8 million euros, or $27.2 million at average exchange.

Sales for the quarter rose 10 percent to 177.7 million euros, or $232.8 million.

“First-quarter 2007 results confirm the soundness of our group…and are in line with our strategies,” said Diego Della Valle, chairman and chief executive officer of Tod’s Group, in a statement.

The Italian executive went on to say the company should post double-digit revenue and earnings growth in the full year, thanks to greater sales at its network of directly operated stores and increased orders for its fall-winter 2007 collections.

The company said, in particular, that the Tod’s fall 2007 leather goods collection, designed for the first time by Derek Lam, had a strong order book. Lam, who had created a small apparel collection for Tod’s, became creative director of the brand earlier this year.

Operating profits advanced 6.5 percent to 34.5 million euros, or $45.6 million.

Since January the company opened seven directly operated stores, which helped boost first-quarter sales in its wholly owned store network by 14.6 percent to 65.7 million euros, or $86.1 million. As of March 31, the company had 117 directly operated units and 65 franchised stores.

Same-store sales through the group’s directly operated retail network advanced 10.6 percent in the first four months of the year.

By brand, Tod’s, the company’s flagship label, generated close to 60 percent of group revenue. Tod’s sales rose 5.6 percent to 95.6 million euros, or $125.2 million. Hogan and Fay both posted double-digit growth, reporting sales of 53.4 million euros, or $70 million, and 23.6 million euros, or $31 million, respectively.

The group’s newest brand, Roger Vivier, more than doubled quarterly revenues to 3.7 million euros, or $4.8 million.

The company said the strong euro hurt growth of leather goods and accessories, where sales increased 6.6 percent to 38.1 million euros, or $49.8 million, in the quarter.

“The lower growth has to be analyzed together with the continuous strengthening of the euro, which did not favor the competitiveness of some of our leather goods products positioned in the high end of the market, in particular in the U.S. and Japan,” the company said in the statement.

Unlike many Italian luxury houses that cite flat national growth, Tod’s said sales in Italy leapt 13.7 percent to 88.9 million euros, or $116.5 million. Sales in the rest of Europe grew by 7.1 percent to 47.5 million euros, or $62.2 million. North American revenues advanced 4.6 percent to 14.7 million euros, or $19.3 million. On a constant currency rate, sales there rose 10 percent.

In Asia and remaining markets, sales rose 7.1 percent to 26.6 million euros, or $34.8 million.

The company said it invested 9.5 million euros, or $12.4 million, in the first three months of the year, and that the majority of the money went toward expanding and updating its network of owned stores.

As of March 31, the group’s net financial position stood at 80.7 million euros, or $105.8 million.