MILAN — It would appear luxury consumers don’t compromise on shoes.
This story first appeared in the November 13, 2008 issue of WWD. Subscribe Today.
Tod’s SpA on Wednesday reported a 13.1 percent gain in operating profits for the first nine months of this year, and said it expected to achieve top- and bottom-line growth for the full year, pending a reasonable holiday period.
The Italian shoe and leather goods firm, which owns the Tod’s, Hogan, Fay and Roger Vivier brands, posted earnings before interest and taxes through Sept. 30 of 108.2 million euros, or $164.7 million. Consolidated revenues increased 9.9 percent to 549.7 million euros, or $836.9 million.
Tod’s released the figures after the close of the Milan Bourse.
“The outstanding results achieved in the first nine months of 2008 confirm the strength of our brands in their respective core businesses, even in a challenging macro and consumer environment. Thanks to the efficiency and slimness of our group’s production structure, the increase in sales has turned into significantly better profitability,” Tod’s chairman and chief executive officer Diego Della Valle said.
Earnings before interest, taxes, depreciation and amortization rose 13.4 percent to 128.8 million euros, or $196.1 million. As of Sept. 30, Tod’s net financial position stood at 29.6 million euros, or $42.8 million, compared with 40.6 million euros, or $57.9 million, at the end of the third quarter last year.
Dollar figures were converted at average exchange rates for the periods to which they refer.
“As far as the full-year results, even taking into consideration the current volatility of sales in the stores, I believe that our expectations to achieve growth both in sales and in net profit are achievable, simply with an acceptable result [in] the forthcoming Christmas season,” Della Valle added.
By brand, Tod’s continued to deliver the bulk of revenues, gaining 3.8 percent to 278.1 million euros, or $423.4 million, while Hogan was the best performer, rising 21.7 percent to 178.9 million euros, or $272.4 million. Sales at Fay improved 11.3 percent to 77.8 million euros, or $118.5 million, and those at Roger Vivier were up 8.2 percent to 13.2 million euros, or $20.1 million.
By category, shoes were the growth driver, with revenues increasing 15.1 percent to 374.3 million euros, or $569.9 million, while apparel sales gained 14.5 percent to 78.1 million euros, or $118.9 million. However, sales of leather goods and accessories fell 8.7 percent to 96.9 million euros, or $147.5 million, as consumers reined in spending.
Tod’s said it was carefully reviewing its leather handbag collection, strengthening the brand identity by focusing on iconic and evergreen products, adding: “This strategy was very successful in the past and is also vindicated by the good results achieved by the Pashmy project.”
By region, sales volumes grew in all markets, although in terms of value, they fell in North America, which Tod’s attributed to the deteriorating macroeconomic environment and the persistence of the financial crisis. Revenues there dropped 7.6 percent to 43.8 million euros, or $66.7 million. Meanwhile, Italy gained 18.4 percent to 298.5 million euros, or $454.5 million; the rest of Europe edged up 2.3 percent to 131.9 million euros, or $200.9 million, and Asia and the rest of the world increased 5.4 percent to 75.5 million euros, or $115 million.