The Italian shoe maker Tod’s posted operating losses in the first half of 2020 due to the impact of lockdown and travel restrictions adopted to tackle the spread of the Covid-19 pandemic. It signaled that the start of the third quarter was better than the trend seen in the previous three months but visibility on future performance remains low.

On an reported basis, first-half Ebitda was a negative €17.7 million and Ebit a negative €94.1 million, compared with profits of €80.4 million and €5.8 million respectively the previous year.

The company also suffered a cash burn, with cash flows from operating activities a negative €66.8 million.

On an adjusted basis, the situation improves with Ebitda a positive €12.3 million and Ebit a negative €64.1 million.

The American broker Jefferies described the sharp deterioration in the operating result and the cash burn as troubling. It also expects that Tod’s will continue “to cede market share to competitors blessed with stronger brand heat and broader shoulders.”

The company is focusing more on e-commerce, which its chairman and chief executive, Diego Della Valle, claims is “growing very well, is giving us excellent results and which allows us to reach also many new customers.”

Over the past weeks, Tod’s has been registering “encouraging signs of recovery, particularly in China, where we are recording double-digit growth rates, while Europe and the Americas remain weak, heavily penalized by the lack of tourists,” he added.

Sales were €256.9 million in the first half, down by 43.5 percent from a year earlier and about €3 million less than expected by financial analysts. Currency fluctuations were not meaningful. At constant currency rates, the top line dropped by 43.6 percent.

The impact of the pandemic was greater in the second quarter, when the lockdown extended worldwide after being largely limited to Greater China in the first quarter. In the period, the decline reached 56.3 percent and sales €104.1 million. For the entire month of April and the first half of May, 53 percent of the company’s stores were closed.

The company noted that its shops reopened progressively, starting from China in the second half of March. In Germany, the stores were reopened at the end of April, in France and Italy in mid-May, in U.K. and the U.S. in mid-June.

As of Aug. 31, 75 percent of the shops were open regularly, 24 percent were open with restricted opening hours and 1 percent was still closed.

The company pointed out that its e-commerce channel remained operational during the lockdown. Online sales were partially affected by some restrictions in logistics activities during the lockdown but continue to grow significantly, it added.

For the Tod’s brand, overall sales were down by 46.1 percent to €124.5 million, with currency-neutral revenues dropping by 46.3 percent. Roger Vivier decreased by 39.2 percent to €61.4 million, or by 39.3 percent in local currencies. Hogan contracted by 41.9 percent to €58.4 million, with same-currency sales down by 42.0 percent.

By product category, footwear sales were down by 42.4 percent in the semester to €211.8 million, while leathergoods and accessories fell by 51.8 percent to €30.0 million. In local currencies, revenues for footwear decreased by 42.5 percent, and leathergoods and accessories retreated by 52.1 percent.

In Italy, revenues declined by 47.6 percent to €65.6 million. Sales in the rest of Europe were down by 51.8 percent to €61.2 million, with constant currency revenues down by 47.1 percent.

In the Americas, revenues fell by 52.8 percent to €16.1 million. The decline widened to 53.8 percent in local currencies. In Greater China revenues were down by 33.4 percent in actual and constant currencies to €74.3 million. Sales in the rest of the world decreased by 42.0 percent to €39.7 million and slipped by 41.9 percent in local currencies.

Sales through directly-operated stores (DOS) and the proprietary e-commerce platform contracted by 42.0 percent in euros and in local currencies to €185.1 million. Sales to franchisees and wholesale accounts totaled €71.8 million, down by 47.0 percent on a reported basis and by 47.2 percent at constant exchange rates.

The group had 292 DOS and 112 franchised stores at the end of June against 288 DOS and 114 franchisees a year earlier.

The net loss widened to €80.6 million from €5.7 million the previous year and the net debt, excluding lease liabilities, grew to €157.9 million from €92.4 million.