TOD’S SALES ROCKET, BUT NET PROFITS FALL

Byline: Courtney Colavita

MILAN — Italian footwear and accessories company Tod’s SpA reported 2000 consolidated sales shot up 14.5 percent to $223.7 million for year ended Dec. 31. All figures are calculated at the current rate of exchange.
Despite revenue gains, the group reported net profits fell 11.5 percent to $16.6 million in 2000. In a statement, the company said higher-than-expected taxes and extraordinary costs for the firm’s initial public offering caused the drop.
Last November, Tod’s chief Diego Della Valle listed 7,562,500 shares, or 25 percent of his company, on the Italian bourse. The Della Valle family controls the remaining 75 percent stake in the company through a holding of which Diego is the majority shareholder.
Tod’s earnings before interest, taxes, depreciation and amortization of $54.5 million, up 7.7 percent from 1999, came in higher than analysts here expected.
“We forecasted [EBITDA] to be around 23.3 percent of consolidated sales, instead it came in at 24.4 percent,” said Paola Durante, an equities analyst with Merrill Lynch in Milan. “I would say overall, the results were good and that the business is sound.”
The group, which owns the Tod’s, Hogan and Fay brands, reported sales, from directly operated stores, generated 31 percent of overall revenue, up 10 percent from 1999. With $189.7 million in liquid assets, analysts are confident Tod’s will continue to see respectable sales increases despite market pressures.
“They have the resources to continue to open more directly operated stores, and from what we’re seeing in 2000, that strategy is paying off,” said Andrea Palladini, an equities analyst at Centrosim.
As reported, Della Valle is using the money from the IPO to rapidly expand the retail networks of his labels. The company put up 13 doors in 2000 and is expecting to open an additional 11 this year.
Durante added Tod’s could be protected, at least in the short term, from a softening U.S. economy because of its stronghold in Europe.
“Italy and Europe account for 80 percent of its sales, making it more resilient to slowdowns not only in the U.S., but also in Japan,” Durante said.
Tod’s stock closed at $37.33 on Wednesday, down $0.45.