Tod's anticipates that it will match market expectations of an increase of more than 12.0 percent in full-year sales in the wake of first-half results and the order backlog for the fall/winter collection. The management stresses that it will be facing a tougher comparison base in the second half of the year. In 2010, Tod's booked sales of €787.5 million.
In the first half, sales were up by 16.4 percent to €439.5 million, beating market expectations thanks to the performance of directly operated stores (DOS). At constant currency rates, the top line rose by 16.2 percent. The order backlog for third-party stores was up by a high-single-digit rate. The backlog is benefiting from an average rise in prices of about 4.0 percent. The group plans to increase prices by 4.0-5.0 percent for spring/summer 2012.
In the six months, revenues from shoes rose by 15.3 percent to €325.5.0 million, sales of leathergoods and accessories swelled by 25.7 percent to €72.7 million, and turnover in apparel was up by 10.7 percent to €41.0 million. Sales of other products were stable at €0.3 million.
All brands booked higher revenues, with Tod's up by 22.3 percent to €239.7 million, Hogan by 7.9 percent to €148.3 million, Fay by 3.3 percent to €35.4 million and Roger Vivier by 64.3percent to €15.6 million. Revenues from other brands were up to €0.5 million from €0.3 million.
The Tod's brand was boosted by the strong performance of DOS worldwide and an acceleration in the sales of handbags. Growth for Hogan and Fay was limited by the group's decision not to expand the brands' presence in Italy. The group is now seeking to develop their presence abroad more forcibly. For Hogan, five store openings are scheduled in Asia.
The company's sales registered double-digit increases in all regions. Italy rose by 11.0 percent to €226.1 million, and the rest of Europe by 13.5 percent to €91.2 million. Greece was the only European country to record negative growth. North America was up by 15.2 percent to €29.3 million. On a currency-neutral basis, turnover in the region was up by 18.0 percent. In Asia and the rest of the world, revenues surged by 36.6 percent to €92.9 million, led by China and Hong Kong where the growth rate was above 50 percent. The Japanese market was higher but only thanks to favorable currency movement. At constant rates, the market was flat.
By channel, revenues generated by sales to third parties and franchisees increased by 10.7 percent to €212.5 million and sales generated by DOS rose by 22.4 percent to €227.0 million. Same-store sales at the DOS rose by 17.2 percent in the 31 weeks to July 31, further accelerating the pace compared with the 15.3 percent growth booked in the first 19 weeks. Hong Kong had the highest increase in same-store sales, followed by China and the U.S. The group's stores benefited from an increase in traffic and a satisfactory conversion rate.
Wholesale revenues were affected by a clampdown on clients not following the company's guidelines on pricing and servicing. The decision led to a 3 percent decline in revenues from wholesale accounts.
At the end of June, the group had 161 DOS and 70 shops in franchising against 151 DOS and 71 franchisees a year earlier. The group could open another 15 new DOS by the end of the year, mainly in Asia. In 2012, the group aims to open at least 15 more shops.
The group's Ebitda margin rose to 26.3 percent of sales from 24.0 percent a year earlier, and the Ebit margin increased to 21.9 percent from 19.7 percent. Margins were lifted by growth in higher-margin products, such as leathergoods, and countries. Tod's managed to lower the cost of rents and labor as a percentage of sales. Expenses for rents were down to 6.9 percent from 7.5 percent and labor costs fell to 14.4 percent from 15.3 percent despite an increase in the headcount to 3,416 at the end of June from 3,102 a year earlier.
The company said it is confident it will reach market expectations of a full-year Ebitda margin of 25.8 percent, 1.3 percent points higher than in 2010, despite planned expenses in the second half that will dilute profitability.
Tod's invested €37.7 million in the first half, but €20 million corresponded to a pledge to take part in the restoration of the Colosseum in Rome. The company will invest a total of €25 million in the project. The whole €25 million figure has been accounted for in the group's debt in the first half but only €20 million as an intangible asset. The group has not paid a penny yet toward the restoration and the funds will be allocated only when work starts.
This year the company will also book the €5.2 million investment pledged for La Scala, the famous opera house in Milan. The investment will be paid in installments over four years, starting in 2012. The company's cash pile was stable at €88.7 million at the end of the quarter compared with €88.8 million at the end of March.