Details at Tod's RTW Spring 2019

MILAN — Tod’s SpA shares closed down 5.94 percent at 40.82 euros on Thursday, in the wake of a drop in preliminary 2018 sales reported a day earlier. In early trading on the Milan Bourse, shares fell as much as 7.6 percent.

Shares have lost 24.98 percent over the last six months and 33.06 percent over the course of the past year.

On Wednesday, as reported, Diego Della Valle, chairman and chief executive officer of the Italian group, said 2018 figures were “substantially in line” with expectations, “despite the growing international economic and political uncertainties.” The group, which comprises the Tod’s, Hogan, Fay and Roger Vivier brands, is in the midst of an overhaul of its business model and, as expected, preliminary 2018 sales have yet to show a turnaround. In the 12 months ended Dec. 31, revenues fell 2.4 percent to 940.4 million euros, compared with 963.3 million euros in 2017. At constant exchange, sales were down 0.5 percent.

The results were dented by the group’s wholesale channel, a lackluster performance of its core footwear category, a drop in its leather goods division and currency fluctuations.

According to a Citi report on Thursday, “the group remains a potential acquisition target as the industry consolidates.”

Credit Suisse noted Tod’s revenues have decreased for the fifth consecutive year and that the last quarter of 2018 was below the 3 percent consensus, cutting estimated 2019 earnings before interest, taxes, depreciation and amortization by 22 percent to 131 million euros. Similarly, according to Equita, fourth-quarter sales were “below expectations (down 3 percent year-over-year to 234 million euros),” and analysts had a “hold recommendation.” Equita sees earnings per share falling 16 percent due to negative exchange rate effects, reduced operating leverage and greater costs.

Banca Akros has a wait-and-see stance, while continuing to be “prudent” and confirming  a “neutral” recommendation, as it believes Tod’s has provided a “positive message on future expectations.”

In a call with analysts reporting nine-months results in November, chief financial officer Emilio Macellari said: “We are in the right direction, but we need more time. And we understand it can take more time than expected, although the first signs are surely positive. I prefer to promise less and deliver more.”

Shares had spiked in December, when one of Della Valle’s holdings submitted a regulatory filing that pointed to plans to increase its stake in Tod’s by up to 5 percent, or 1.7 million shares.

According to the filing, the holding has signed a contract with Crédit Agricole Corporate and Investment Bank, under which it agreed to buy up to 1.7 million Tod’s shares through an accelerated shares purchase.

Della Valle and his family own around 60 percent of the Italian footwear and leather goods company.