MILAN — The Tod’s Group returned to the black in 2022 on the back of a 13.9 percent gain in revenues, prompting chairman and chief executive officer Diego Della Valle to describe the performance as “good and satisfying,” setting “the foundations for future turnover growth.”
In the 12 months ended Dec. 31, net profit amounted to 23.1 million euros, compared with a loss of 5.9 million euros in 2021.
Sales totaled 1 billion euros, compared with 984.2 million euros in 2021. Compared with 2019, revenues rose around 10 percent.
The impact of currencies was positive, particularly for the Tod’s and Roger Vivier brands, which have the largest presence abroad. The group also includes the Hogan and Fay labels.
“Now that the organization structure is ready and the necessary investments are underway, we expect a growth in turnover in the medium term and, subsequently, very satisfactory profitability,” Della Valle said. “Considering the excellent start of the season in our stores and the solidity of the order book for next season, we are very confident about the group’s future results, even in an international context that remains uncertain and unpredictable.”
During a conference call with analysts at the end of trading on Monday evening, chief financial officer Emilio Macellari said that the 2023 consensus of 7 percent growth in both revenues and operating profit margins was “a fair assumption, feasible and achievable.”
“Without overlooking both appropriate cost control and efficiency improvement, our main goal remains the asset value maximization related to each brand, together with the profitability of the group,” Della Valle continued.
In 2022, operating profit totaled 58.2 million euros, more than double the 24.1 million euros in 2021.
Earnings before interest, taxes, depreciation and amortization amounted to 207.2 million euros, or a 20.6 percent margin on sales, up by more than two percentage points from the previous year.
The growth was driven by the strong increase in sales and by their more favorable mix, in terms of geographical area, distribution channel and product categories.
“Net of China, these were fantastic results, better than expected and outperforming analysts’ expectation,” remarked Macellari, referring to the only country that saw a decline in sales due to the restrictions put in place to curb the spread of COVID-19.
Revenues in Greater China decreased 8.4 percent to 287.2 million euros. “In 2022, the Chinese market, after a good start to the year, suffered a significant slowdown in growth, starting in March,” Macellari said. “Even after the progressive easing of these measures, in the second half of the year, the trend of consumer demand remained volatile and impacted by local and temporary lockdowns in various primary cities.”
In 2022, sales in Italy rose 15.9 percent to 251.7 million euros, and revenues in Europe climbed 25.6 percent to 216.7 million euros. Both regions recorded a progressive improvement in results, starting from the second quarter of the year, thanks to both local customers and the strong presence of intra-European, American and Middle Eastern tourists.
Revenues in the Americas rose 31.4 percent to 82.1 million euros.
Sales in Rest of the World area rose 43.3 percent to 169.3 million euros, driven by the excellent results of Japan and South Korea.
Macellari said Korea registered a slowdown after the Halloween tragedy, when more than 150 people were killed and dozens were injured after being crushed in a large crowd in Seoul’s Itaewon nightlife district.
Asked about current trading, Macellari said that since the beginning of 2023 the group saw that “consumer spending restarted to grow in China while it was still negative at the end of 2022. The Greater China market today is positive, showing a double-digit growth rate net of the Chinese New Year.”
Last year, the Tod’s brand recorded growth in all geographical areas, both in shoes and in the new families of leather goods and accessories, reporting a 19.1 percent increase in revenues to 510 million euros.
The Roger Vivier brand had a good start to the year in all geographic areas, but, given its high exposure to the Chinese market, its growth slowed tarting last March. Sales were up 7.1 percent to 246 million euros.
Hogan reported 10.9 percent growth to 195.9 million euros, while Fay sales rose 10.7 percent to 53.4 million euros.
By product category, sales of shoes rose 10.5 percent to 776.9 million euros; leather goods and accessories were up 33.7 percent to 160.6 million euros, and apparel grew 13.9 percent to 67.8 million euros.
Retail sales increased 12.7 percent to 743.3 million euros, representing about 74 percent of revenues.
As of Dec. 31, the group comprised 333 directly operated stores and 89 franchised units, compared to 318 DOS and 88 franchised stores at the end of 2021.
The wholesale channel reported a 17.5 percent growth to 263.7 million euros, after the rationalization of wholesale customers over the past few years.
“We continue to remain focused on enhancing organic growth in our stores and developing our omnichannel strategy, while continuing to invest in the digital world,” Della Valle concluded. “It is equally important to protect both our supply chain, which guarantees us the best possible quality, much appreciated by our consumers all over the world and which reinforces the desirability of our Italian lifestyle products. Great emphasis is also given to the world of sustainability, solidarity and welfare, in which our group has been active for many years.”
Macellari said there has been no change in the store opening strategy, but underscored that the group has “to have a higher focus on making the existing stores more profitable,” and open new ones “when there is really a great opportunity.”
In 2023, he expects the new openings to be in the mid to high-teens. In the pipeline, half of the openings will be in China, around 25 to 30 percent in the rest of the world, and around 20 percent in Europe, Italy and the U.S., he said. “Maybe Hogan will be the highest number [of store openings].”
After years of “very low increases” in pricing, the group expects to increase them in “the high-single or very low-double digit” range.
In 2022, the group invested 45.8 million euros in tangible and intangible fixed assets, slightly higher than the 44.9 million euros in 2021. Most of the resources were devoted to the expansion and renewal of the store network; the rest of the investments relate to continuous modernization of its production and of the corporate structure, with particular emphasis on the development of digital.
As of Dec. 31, net of liabilities of 483.9 million euros, the net financial debt amounted to 71.1 million euros, broadly aligned with the balance at the end of December 2021.
Pressed for more details about the group’s upcoming projects following the failed delisting of Tod’s shares last year, Macellari said a capital markets day is in the works after the first half of the year.
No dividend will be paid this year, but the executive expects next year the payment will be resumed.