MILAN — Gains in Asia and the U.S. and a strong performance of the Tod’s and Roger Vivier brands contributed to a 7.8 percent rise in 2012 preliminary revenues at Tod’s SpA, despite a drop in domestic sales.
This story first appeared in the January 24, 2013 issue of WWD. Subscribe Today.
In the period ended Dec. 31, the Italian luxury group posted preliminary sales of 963.1 million euros, or $1.23 billion, compared with 893.6 million euros, or $1.24 billion, in 2011.
Dollar amounts have been converted at average exchange rates for the periods to which they refer.
Diego Della Valle, chairman and chief executive officer of the group, parent to the Tod’s, Hogan, Fay and Roger Vivier brands, said he was “deeply satisfied” with the company’s performance in the year, “despite the challenging environment.” Della Valle explained the decline in domestic sales by saying: “Given the strength of our brands, the macroenvironment in Italy and the strong demand from the foreign markets, we have decided to make our Italian wholesale distribution even more selective, in order to preserve our brands’ exclusivity and products’ positioning.”
Looking ahead, the executive said he was confident about the group’s net profit in 2012, which he believed “will be higher than the outstanding level reached the previous year,” based on the “favorable sales mix — by distribution channel, by region and by product category.”
Full 2012 figures including profits will be released March 13.
In the fourth quarter, revenues amounted to 213.2 million euros, or $275 million, up 9.6 percent from the same quarter in 2011.
In 2012, the Tod’s brand remained the group’s core business, with sales of 569.7 million euros, or $729.2 million, up 16.8 percent from the year before. Hogan and Fay continued to be affected by the group’s strategy to rationalize the number of its wholesale clients in Italy. The two brands are not as developed outside Italy as the Tod’s and Roger Vivier labels. Hogan sales totaled 243.4 million euros, or $311.5 million, registering a 13.3 percent drop from last year, and Fay, which is still mainly a domestic brand, showed sales of 74.5 million euros, or $95.3 million, down 15.2 percent. Conversely, Roger Vivier revenues more than doubled, reaching 74.5 million euros, or $95.3 million, compared with 36.5 million euros, or $50.7 million, in 2011.
The group’s core category, footwear, showed a 9.9 percent rise in sales, which reached 710.4 million euros, or $909.3 million.
Leather goods and accessories rose 14.2 percent to 165.5 million euros, or $211.8 million, while apparel declined 15.1 percent to 86.2 million euros, or $110.3 million.
“The sales performance by region reflects the group’s strategy to focus its growth on the foreign markets, mainly the Asian ones, which offer higher growth potential, while being highly prudent on the domestic market,” said the company.
Italy showed a 14.5 percent drop in revenues to 383.9 million euros, or $491.4 million. Sales in Europe, excluding Italy, rose 10.1 percent to 200.3 million euros, or $256.4 million, mainly driven by the double-digit performance registered in the U.K. and France.
Revenues in the U.S. gained 30.8 percent to 81.6 million euros, or $104.4 million, despite the significant impact of Hurricane Sandy and fourth-quarter figures.
Asia and the rest of the world showed a 48.7 percent jump to 297.3 million euros, or $380.5 million. In particular, the company highlighted “outstanding results” in Greater China, which accounts for about 19 percent of total sales, and which counts 54 directly operated stores and three franchised units. Tod’s also singled out “significant” increases in Korea and Japan.
Citi luxury analyst Thomas Chauvet said in a research note issued on Tuesday that “against all odds,” and despite the group’s exposure to Italy at the beginning of 2012, Tod’s shares were among the best performers in the luxury sector in 2012 and highlighted the company’s “interesting and rapid transformation phase, which should support revenue and margin expansion,” without a “radical transformation of the strategy.”
The research note raised the question of whether Tod’s could be an acquisition target. LVMH Moët Hennessy Louis Vuitton chairman Bernard Arnault has had a 3.5 percent stake in Tod’s since its flotation in 2000, and Della Valle has been on LVMH’s board since 2002. “We believe that family ownership (and majority control) is unlikely to change in the short to medium term, although it may be tempting for the controlling Della Valle family to consider a share placement given the strong share price performance in 2012,” the report said.