Tod's RTW Fall 2020

MILAN — While reporting Tod’s SpA’s 2019 results on Thursday, the management of the Italian luxury group discussed the measures it is taking to tackle the coronavirus crisis.

“The arrival of coronavirus has forced us to review the strategy of the first half of 2020 and now, in a climate of strong uncertainty, we have prepared a plan that allows us to cut immediate costs and manage the flow of goods with great prudence, trying to dose at best the quantities of goods that we will put on the market,” said chairman Diego Della Valle. “However, we are ready to start quickly as soon as the market normalizes. I believe that before the end of April it will not be possible to perceive how the semester will look. But now our first goal is to take care of the health of our employees, helping them for all the problems that coronavirus can create, even indirectly, in managing the daily life of each family. Notoriously our Group has always been close to its employees and this time it will be even more.”

Chief financial officer Emilio Macellari addressed the coronavirus emergency during a conference call with analysts, saying that the group had implemented a series of actions to protect the health and safety of its employees, including the adoption of smart working, the closure of stores in high-risk areas, and the recommendation to employees to follow specific health protection rules.

“The group has also taken charge of assisting its employees, also by providing financial support, for the specific needs related to the management of the emergency situation,” he said.

Since the scenario continues to evolve, Macellari said, “the economic impact of this situation is still difficult to evaluate.” That said, the group has taken action to set up “contingency plans,” containing all operating costs, and concentrating efforts on “only what is absolutely necessary” and core business activities, said chief executive officer Umberto Macchi di Cellere, and limiting investments only to necessary activities, while protecting the quality of the products and “develop ideas for when things will restart.”

Responding to one analyst who asked if there had been any change in the number of shares owned by the family of Tod’s chairman Diego Della Valle, Macellari said no additional shares were acquired “in recent time,” and that the Della Valles controlled a 71 percent stake in the group. Referring to Diego and his brother Andrea Della Valle, the cfo said that “they have no intention to divest and they consider themselves buyers, not sellers.”

Both Macellari and Macchi di Cellere said it was difficult to provide forecasts in light of the COVID-19 crisis and the latter added that with the opening last week of some malls in China with partial hours, there had been some small positive signs after “a very, very high impact” during the health emergency there. “We cannot predict the mind-set of people but the Chinese have a strong capability to react very fast and there’s a national pride. But whether it will take one month or six is difficult to say,” said Macchi di Cellere about a full recovery in China.

Likewise, how long the crisis will last in Italy is not predictable, he added, while commending the government’s serious decisions taken to fight the crisis and people’s reaction to the regulations.

Macellari said it was “more difficult to predict how the first half of the year will look, and in particular the second  quarter. I have more confidence in the second half given the high level of uncertainty in the second quarter. It’s too early for any reliable indication.” He added that one third of sales in Italy are made to tourists. He added that it was “particularly disappointing because the year was starting in the best possible way, with very good results in the first three weeks” of 2020.

Macchi di Cellere said that e-commerce will “reasonably” be the first channel to pick up and Macellari said that the online channel last year accounted for more than 8 percent of sales. The direct channel accounted for 60 percent of this.

The Tod’s group controls the Tod’s, Hogan, Fay and Roger Vivier brands. Last October, Walter Chiapponi was appointed creative director of the Tod’s brand. 

Overall, Tod’s SpA reported a 1.7 percent decrease in net profits to 46.3 million euros last year, compared with earnings, net of minority interests, of 47.1 million euros in 2018.

In the 12 months ended Dec. 31, revenues totaled 916 million euros, down 2.6 percent compared with 940.5 million euros in the previous year.

In the fourth quarter, sales were up 1.7 percent to 238.3 million euros, compared with the same period in 2018.

“In 2019, we continued the execution of our medium-term strategic plan, trying to get closer to the set objectives as quickly as possible. The last months of the year gave us positive signals, and even better results were being achieved in the first weeks of this year, until the arrival of the coronavirus,” said Diego Della Valle. “This confirms that all the initiatives undertaken were going in the right direction, also considering the desirability that makes our products special and therefore competitive with the collections of other famous brands of worldwide importance.”

Della Valle cited the group’s investments in its retail network and in research and development, with the goal to increase traffic in stores and increasingly control direct distribution, which today represents more than 70 percent of sales. “E-commerce is growing very well and we will increasingly invest in this sales channel to accelerate its growth. When our stores and e-commerce are fully operational, the turnover, but even more, the group’s profits will grow more than proportionally.”

By label, Tod’s sales last year were down 7.4 percent to 461.8 million euros, showing positive results in the retail channel and a healthy start of the new T Timeless project, both for shoes and leather goods.

Revenues of Roger Vivier climbed 15.5 percent to 200.5 million euros, registering positive results in all the geographical areas in which it operates and “excellent feedback” on new product families.

Hogan sales were down 4.7 percent to 196.5 million euros with double-digit growth in Greater China, despite the protests in Hong Kong.

Fay sales decreased 8 percent to 56.3 million euros, mainly due to the weakness of the Italian market.

Sales of shoes, the group’s core business, were down 1.7 percent to 730.7 million euros, but showed a positive trend in the fourth quarter of last year.

Leather goods and accessories were down 5.4 percent to 121.7 million euros, but the new Tod’s lines of handbags received positive feedback.

Apparel dropped 6.7 percent to 62.7 million euros, broadly reflecting the performance registered by the Fay brand.

Sales in Italy fell 7.7 percent to 260.6 million euros, although the performance in the fourth quarter of the year was positive, with an improvement in the trend of both distribution channels.

In the rest of Europe, the group’s revenues totaled 237.6 million euros, down 2.6 percent. In this market, too, the fourth quarter of the year was positive, thanks to the contribution of retail.

In the Americas, sales dropped 3.2 percent to 70.6 million euros, but both retail and wholesale channels showed an uptick in the last quarter.

Revenues in Greater China rose 2.3 percent to 215.1 million euros. The positive results recorded in Mainland China, which represents more than 60 percent of this region, were partially offset by the sharp slowdown in the Hong Kong market.

In the “Rest of the World” area, sales inched up 0.8 percent to 132.1 million euros.

Retail revenues rose 6.2 percent to 645.8 million euros, representing more than 70 percent of the group’s sales.

As of Dec. 31, the group’s network comprised 290 directly operated stores and 115 franchised stores, compared to 284 DOS and 120 franchised stores at the end of Dec. 2018.


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