A Tod's design

MILAN — Tod’s SpA felt the pinch of a slowdown in tourism last year but saw an improvement in the final quarter.

In the 12 months ended Dec. 31, the Italian luxury firm reported a 3.2 percent decline in preliminary sales to one billion euros, or $1.1 billion, compared with 1.03 billion euros, or $1.14 billion, in the previous year.

At constant exchange rates, including hedging, sales were down 3.8 percent.

“The improvement of the sales trend registered in the last quarter of the year confirmed the good reception from customers for the winter collections, thanks to their focus on iconic products, that reflect the brands’ DNA and the Italian style, and well combine quality, craftsmanship and innovation,” said the group’s chairman and chief executive officer Diego Della Valle. “
Also the early feedback of the new summer collections are positive, and this confirms us to be in the right direction: our strategy is delivering good signs.” In the last quarter, revenues were down 1.5 percent to 246.3 million euros, or $271 million, compared with the last quarter in 2015.

Della Valle emphasized the development of the group’s digital division, “which is, and will be more and more, a key factor of success.
 As far as e-commerce is concerned, our structure will become even more efficient, ready to catch all the opportunities that the market will offer.”

Last year, revenues at the core Tod’s brand were down 6.7 percent to 559 million euros, or $615 million, dented by the sharp tourist decline.

Hogan sales decreased 3.2 percent to 214.2 million euros, or $235.6 million, mainly hurt by the domestic market, but helped by positive results abroad.

Fay benefited from its expansion around the world and showed a 5.3 percent growth to 62.6 million euros, or $68.8 million, with a sharp acceleration in the fourth quarter.

Sales of Roger Vivier gained 6.6 percent to 166.3 million euros, or $183 million.

“We remain highly focused on organic growth of the existing stores, which have great potential, and on the opening of some “new generation stores,” which will be able to attract clients through the totally new shopping experience,” Della Valle continued. “The style department has undertaken some changes, necessary to implement the new strategic plan; the management team, partially renovated, will be soon completed with some new arrivals, enhancing all the necessary skills to manage the Group, which will in this way be ready to face a market in strong and rapid change”.

Sales through directly operated stores declined 4.3 percent to 630.3 million euros, or $693.3 million. The SSSG, or Same Store Sales Growth, rate was  down 12.2 percent.

As of Dec. 31, the company comprised 272 directly operated stores and 107 franchised stores, compared with 257 and 98, respectively, at the end of Dec. the previous year.

Revenues to third parties decreased 1.3 percent to 373.7 million euros, or $411 million, mainly due to the very challenging comparison basis as in the fourth quarter of 2015 this channel grew 28.7 percent, said the company.

By category, sales of footwear were down 2.5 percent to 791.3 million euros, or $870.4 million. Leather goods and accessories decreased 9.4 percent to 142.5 million euros, or $156.7 million. The divisions showed an uptick in the last quarter.

Sales of apparel were up 2.2 percent to 68.3 million euros, or $75.1 million.

By market, Italy showed a 3.5 percent drop to 311.5 million euros, or $342.6 million.

In the rest of Europe revenues edged up 0.6 percent to 250 million euros, or $275 million. The company said the only countries in the area that showed a slowdown were France and the U.K.

The performance in the Americas was dented by a drop in tourism and sales were down 8.4 percent to 96.7 million euros, or $106.3 million.

Hong Kong remained weak, while showing signs of improvement, and dragged group revenues in Greater China down 6.8 percent to 210.3 million euros, or $231.3 million, despite a positive performance in mainland China and Macao.

In the “Rest of the World” area, sales inched up 0.9 percent to 135.5 million euros, or $149 million. South Korea registered a solid double-digit revenues growth and Japan was broadly flat compared to last year, despite a very challenging comparison basis.

Full financial results will be released on March 14.

On Dec. 23, Tod’s SpA signed with the Italian Tax Authorities an agreement that defines the criteria used to calculate the amount of the quota of income exempt from income taxes for the purpose of the so-called “Patent box” regime. This is a tax relief regime for the benefit of Italian companies that produce income through the direct use or the licensing to third parties of intellectual property rights. The agreement covers the fiscal years 2015-19 and may be renewed for additional five years.
 While the amount has not been calculated yet, Tod’s expects the application of the method to determine an approximate 4 percent increase in net profit for 2015. Salvatore Ferragamo and Moncler have also adopted the Patent Box regime.