Tod's RTW Spring 2019

MILAN Tod’s shares closed down 10.88 percent to 48.44 euros after a difficult day of trading on the Milan Bourse on Thursday, following the release of the Italian luxury group’s nine months results a day earlier.

As reported, Tod’s sales in the period ended Sept. 30 declined 2.2. percent to 706 million euros, compared with 722.2 million euros in the same period last year, as management said it would take some time to see the results of the new strategies set in motion by chairman and chief executive officer Diego Della Valle, which includes product drops throughout the year and capsule collections. At constant exchange rates, sales in the period were flat, up 0.1 percent. The Della Valle family has a 61.5 percent stake in the group.

The cautious outlook was punished by analysts.

The sentiment indicator at RBC Europe, was negative, with an “underperform” rating. “The Tod’s Group continues to perform below its long-term potential but these results confirm that it is still too early to buy the stock and we continue to see a more favorable risk-reward trade-off elsewhere in our luxury coverage,” stated Rogerio Fujimori. “This is because the competitive backdrop in its core shoe category fundamentally changed in recent years, with major luxury/fashion groups (with much deeper pockets) making significant inroads in the category by capturing the bulk of the incremental luxury spending from Millennial consumers.”

Giuseppe Marsella and Luca Solca at Exane BNP Paribas said the performance confirmed expectations of “a poor quarter.” The bank “slightly revised downwards” full-year estimates and confirmed a neutral rating. “We believed that expectations of a weak Q3 were already priced in at that time and that product innovation efforts will soon start to work.”

Mediobanca Securities also issued a neutral rating, underscoring that it will take time to see results of the initiatives and strategies put in place by the group.

Berenberg noted this was the 21st consecutive quarter showing a slowdown, issuing a hold rating, and expressing a skeptical view of a turnaround.

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