Robust sales performance of its e-commerce business, the Roger Vivier brand and the Greater China market drove Tod’s sales higher in the first nine months of 2021.
Year-to-date figures in the period showed the company is on track to achieve its full-year targets and turned the page on the pandemic year of 2020 — one that resulted in the absence of tourism shopping and shuttered doors across the globe.
As strong local sales in core geographic areas offset losses generated by a drastic decline in tourism flows, revenues rose 37.6 percent to 622.6 million euros compared with 452.6 million euros in the same period of 2020 and were still 6.9 percent lower at constant exchange compared to the first nine months of the pre-pandemic 2019 period. Sales in the third quarter rose 14.6 percent to 224.3 million euros.
“The revenues of the third quarter confirmed the trend of improvement that we have begun to register for some time. We are particularly pleased to see that, in the quarter, retail revenues exceeded the values of 2019 and that the month of October is confirming this acceleration in sales results,” said Diego Della Valle, chairman and chief executive officer of the Tod’s Group in the nine-month earnings statement.
Emerging from a period in which currency fluctuations negatively impacted top performing brands Tod’s and Roger Vivier, the company said it will be re-evaluating its pricing strategy in the near-term.
“We are considering working on moving upward in the pricing of other collections,” said the group’s chief financial officer Emilio Macellari during a conference call after the close of the Milan Bourse on Wednesday evening, stressing the justifiable high-quality of the group’s products and management’s ongoing brand positioning efforts.
In the nine months, sales in the retail channel surged 47.1 percent to 447.7 million euros, while the wholesale channel trailed, rising 17.9 percent to 174.9 million euros.
“The wholesale market is progressively reducing,” Macellari commented, adding that concentrating on retail will also allow the Tod’s Group to be more in control of its distribution channels.
Reflecting this shift, at the end of September of this year, the group’s distribution network comprised 312 directly operated stores and 96 franchised units, compared to 296 directly operated stores and 109 franchised stores at the end of September 2020.
Online sales are also growing in terms of importance for the company and doubled in terms of weight in the first nine months of the year versus the same period of 2019, Macellari added.
In the nine months, sales from the Italian market rose 22.2 percent to 151.4 million euros, yet was still down 22.5 percent on the nine month 2019 levels. Europe inched up 10.5 percent to 127.2 million euros, down 28 percent from the first nine months of 2019. Revenues in the Americas surged 60.1 percent to 41.4 million euros, still down 13.1 percent versus the same period of 2019. Sales in Greater China rocketed 79.5 percent to 224 million euros and was the only reported market to post an increase compared to the first nine months of 2019, rising 45.4 percent. The Rest of the World area was up 24.9 percent to 78.6 million euros in the first three quarters of the year, yet still down 18.3 percent versus the first three quarters of 2019.
The group did not provide a breakdown of its third quarter earnings but said that “the Asia and Rest of the World region in the third quarter suffered a temporary slowdown, mainly linked to Japan. On the other hand, the business in the Americas accelerated, and revenues for the quarter exceeded the value of the corresponding period of 2019.”
By brand, the rise in revenues generated from the Roger Vivier brand outpaced the rest, up 51.4 percent to 161.4 million euros. Tod’s sales increased 40.1 percent to 296.1 million euros; Hogan reported a 21.8 percent uptick to 133 million euros, while Fay was up 24.5 percent to 31.5 million euros.
Shoes, the group’s core category, reported a 35.1 percent rise in revenues to 501.3 million euros.
Sales of its leather goods and accessories category were up 59.5 percent to 82.6 million euros, while apparel rose 29.2 percent to 38 million euros.
With its nine-month statement, the company also announced that its outgoing CEO and managing director Umberto Macchi di Cellere will also leave the board of directors. In October, Tod’s Group said the CEO position will now be taken up by chairman Diego Della Valle and his brother Andrea, vice chairman of the Italian luxury group, while concurrently announcing Simona Cattaneo appointment as general manager.
When asked by analysts if the group currently has plans to expand into the cosmetics and fragrances segments given Cattaneo’s previous experience at Coty Inc and L’Oréal’s Kérastase, Macellari commented that there are no current plans in the works. However, he expects that the digital communications experience Cattaneo garnered at Burberry, as well as unique collaborations forged through the Tod’s Factory initiative, are among the facets that will strengthen the company’s broader strategy aimed at penetrating a younger demographic.
Macellari was careful to reiterate that he was confident that the company will meet consensus targets for the full year, which currently forecasts sales of 822 million euros. He added that while challenges persist, the group has the potential to return to a positive earnings before interest and taxes position in 2022, if the global situation doesn’t worsen. EBIT is expected to be negative 15 million euros in 2021 but is expected to rise to a positive position of 26 million euros by 2022.
“Starting from 822 million euros [in sales], I can consider that even a level of 840 is reasonable and achievable. Obviously I am implying no major catastrophes or new closures and lockdowns or unhappy situations can be repeated in the near future…and while I am not famous for being an optimistic guy, I prefer to be realistic. The EBIT level of the consensus is fair enough,” he said, adding that gross margins will “increase faster in 2022” due to a more favorable mix of distribution channels and geographic areas.