MILAN — Despite the international geopolitical, economic and health uncertainties, Diego Della Valle, chairman and chief executive officer of Tod’s SpA, said he felt “optimistic about 2022 and confident we can continue to build on a solid path of sales and profitability growth.”
He underscored that the fall 2023 collections, presented last month, “received an extremely positive appreciation from our customers, which translated in an excellent fall sales campaign.”
Commenting on the luxury group’s performance last year, Della Valle said it is “involved in humanitarian efforts to support the people mostly affected by the ongoing war [in Ukraine], with the hope that it will end soon.”
Chief financial officer Emilio Macellari said during a conference call with analysts on Thursday at the end of trading that direct turnover in Russia “is not particularly important, representing around 0.4 to 0.6 percent of the total.” The group has three franchised stores in Russia and one in Kiev, also franchised, but it has suspended its deliveries to Russia since the beginning of the war, and is “evaluating its next steps. We are not a government issuing sanctions and we don’t take a position against the populations, but we don’t want to pay attention to business only, we care about humanity. We suffer seeing the images of the war and we don’t close our eyes. This company is particularly sensitive about social issues.”
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He admitted the group also wanted to be loyal to its partners, which have invested in its brands, but at the same time it was considering future possibilities without being able to predict how things will evolve. In any case, he added: “We don’t know what mood the Russian people can be in. While people living in small villages may be on the same page as their leader, in bigger cities close to Western attitude and habits, we are not sure people in Moscow intend to go and buy products that are not of prime necessity.”
Last year, Tod’s leather goods category and the Roger Vivier brand fueled the group’s revenues, which were also lifted by a strong performance in Greater China.
While the luxury company reported a net loss of 5.9 million euros in 2021, which compares to a loss of 73.2 million euros in 2020, a 38.7 percent increase in revenues to 883.8 million euros and careful cost management contributed to a recovery of its operating profit, which was well above Barclays’ consensus of 5 million euros.
In the 12 months ended Dec. 31, operating profit amounted to 24.2 million euros, compared with an operating loss of 135.4 million euros in 2020 and an operating profit of 3.6 million euros in 2019.
Compared with 2019, sales decreased 3.5 percent.
In 2021, sales recorded a progressive improvement compared to 2020. In the fourth quarter, revenues climbed 41.6 percent to 261.2 million euros, compared with the same period the year before. Compared with the fourth quarter of 2019, they rose 9.6 percent.
The Tod’s brand reported sales of 428.3 million euros, up 44 percent on 2020 but down 6.2 percent at constant exchange rates in 2019.
Della Valle said the group is “very focused on the growth and positioning of our individual brands, in order to strengthen them more and more, by dedicating all the necessary investments to them.”
Macellari explained that Tod’s is focusing on its women’s handbags and that it has “seen very good and encouraging results in leather goods.” The goal is to expand the family of products, “confident in a faster increase into the business of leather goods and women’s handbags.” The brand has also been attracting a younger generation, while preserving the loyalty of its longtime customers.
In 2021, the Roger Vivier brand registered sales of 229.6 million euros, up 43.5 percent on 2020 and a 15.9 percent increase compared with 2019 at constant exchange.
“We are very happy with its performance, the brand has a good penetration and appreciation in the Chinese market and the strategic goal is to be more visible and more appealing in other markets,” said Macellari, while lamenting that Hong Kong, which two years ago was the largest market for the brand, continues to be impacted by the pandemic.
Hogan last year reported sales of 176.7 million euros, up 24.8 percent on 2020 and down 10.1 percent on 2019. “We are working to expand Hogan’s business and it is starting to be more appealing in the Far East,” said Macellari.
Fay sales totaled 48.2 million euros, up 28.4 percent on 2020 and down 14.5 percent on 2019.
“We are not underestimating Fay, we have started revamping old styles with Fay Archive, and we see the attention of consumers is increasing. The brand’s market is predominantly in Italy, and even Fay can give us positive surprises,” observed Macellari. “For all of our brands, we are working on improving store productivity in the existing network in all markets, with local marketing initiatives, with the help of important communication activities. We are aware that to have a reliable brand and a good product is fundamental, but it is key and strategic to communicate it well.”
By category, sales of shoes amounted to 703.2 million euros, up 35.5 percent on 2020 and down 3 percent on 2019 at constant exchange rates, affected by the rationalization of its wholesale channel.
Leather goods and accessories sales totaled 120.1 million euros, climbing 63.6 percent on 2020. Compared with 2019, this was a 0.5 percent increase.
Apparel sales totaled 59.5 million euros, up 34.5 percent on 2020 and down 4.9 percent on 2019.
Sales in Italy amounted to 217.2 million euros, up 32.7 percent on 2020 and down 16.6 percent on 2019 at constant exchange.
Sales in Europe totaled 172.5 million euros, up 15.4 percent on 2020 and down 27.4 percent on 2019, due to the absence of tourists, especially from Asia.
Sales in the Americas totaled 62.5 million euros, up 70.6 percent on 2020 and down 7.9 percent on 2019.
“The U.S. started in 2021 with a very weak performance, but the market progressively increased,” said Macellari. “By the end of the year, we recovered the gap with other peers, but we are still a bit late in that market. We started to do more activities and communication with store events, and the result is positive partially because the market shows signs of growth and partially because we started to solicit this performance.”
Asia and Rest of the World region recorded a strong fourth quarter, driven by the significant improvement in results of Japan and Korea, where revenues largely exceeded 2019 figures. In the area sales totaled 118.2 million euros, up 30.2 percent from 2020 and down 6.8 percent from 2019.
For the entire year, the business in Greater China maintained a very strong double-digit growth compared to 2019. Sales in Greater China amounted to 313.4 million euros, up 59.5 percent on 2020 and up 45.8 percent on 2019.
Hong Kong in 2021 represented 3 percent of total sales, said Macellari.
“In China, I can confirm the trend is a bit more volatile than in the past,” said Macellari, citing in recent weeks new cases of COVID-19 infections, causing restrictions and impacting the business, but the area is “still very positive, growing at a double-digit pace.”
In 2021, earnings before interest, taxes, depreciation and amortization amounted to 160.8 million euros, with an incidence on revenues of 18.2 percent. In 2019, EBITDA totaled 155.9 million euros.
Retail revenues grew 3.1 percent to 659.4 million euros compared with 2019 and representing about 75 percent of the total. Compared with 2020, the channel rose 47 percent.
As of Dec. 31, the group counted 318 directly operated stores and 88 franchised stores, compared to 300 DOS and 103 franchised stores at the end of December 2020.
The e-commerce channel more than doubled the sales in 2019. Macellari said this year the group will start to work with Farfetch.
The wholesale channel reported sales of 224.4 million euros, up 19.1 percent on 2020. Compared with 2019, it decreased 16.4 percent due to the streamlining of its accounts.
The company last year raised its prices by 4 to 6 percent in response to the increase in the cost of some raw materials, energy, logistics and transportation, said Macellari.
For the third year in a row, the company will not pay dividends.