In what could be Tod’s Group last earnings report for the financial community before the company goes private, the Italian luxury goods maker reported a 6.7 percent year-over-year drop in sales.
Sales were pulled down by declines in the shoe category, a drop in revenue from Greater China and a negative foreign exchange impact in the first quarter of 2024. For the quarter, the company posted 252.3 million euros in sales, down from 270.5 million euros in the prior-year period.
Earlier this month, the Italian luxury group reported that the offer of Tod’s shares promoted by Crown Bidco Srl, an L Catterton affiliate, had reached an aggregate stake greater than 90 percent of the share capital, the threshold necessary for the company’s delisting.
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“The impact of currencies was negative; at constant exchange rates, i.e. using the same average exchange rates as in the first three months of 2023, including the effects of hedging, the group’s revenues would amount to 257.9 million euros, down 4.7 percent from the first quarter of 2023,” the company said in a statement Wednesday.
Sales of the Roger Vivier brand led losses, dragged down by the weakness of the Chinese market, falling 23.2 percent to 52.7 million euros. Tod’s followed, down 6.6 percent to 121.7 million euros, while sales of Hogan and Fay rose 8.2 percent to 61.5 million euros and 12.7 percent to 16 million euros respectively.
By category, shoes slid 8.3 percent, leather goods and accessories fell 3.7 percent and apparel outperformed, rising 4 percent.
Management expressed confidence in the upcoming fall season.
“We are pleased with the reception customers have shown for the collections now in store and the excellent response to the new shoes, leather goods and accessories projects presented for the upcoming fall season,” the company said.
Geographically, Greater China was impacted by a sharp drop of store traffic and weak consumption, plummeting 24 percent, followed by the Rest of the World category, down 5.8 percent, despite good results form Japan and the Middle East. The America’s category bucked the trend up 19.6 percent, while the rest of Europe was up 5.1 percent, helped by solid tourist purchases and local demand. Tod’s retail sales plunged 8.9 percent, while wholesale was down 1.4 percent in the first quarter due in part to the “cautious attitude adopted by the group in the current industry environment,” the company said, noting positive performance of its e-commerce business in the period.
Tod’s distirubtion network, as of March 31, consists of 349 directly operated stores and 104 franchised stores, up from 333 directly operated stores and 89 franchised stores at that time last year.
Diego Della Valle, chairman and chief executive officer of the group, said the delisting came at the right time. “We made this choice to develop the full potential of our individual brands, making all the necessary investments in a timeline we deem most suitable. We have a great growth opportunity and we will try to seize it, operating with a long-term horizon. We have also decided to share this strategic decision with two global partners, who have a great experience in our sector: L Catterton and LVMH, with whom we shared our entry on the stock exchange over 20 years ago, both of whom will certainly be precious travel companions,” he said in the press statement.
