For the second quarter in a row, Tod’s beat market expectations in terms of sales development as the group registered the “first positive signs” of its strategy of renewing its collections more regularly and reducing its exposure to wholesale clients. Tod’s posted fourth-quarter sales of €238.4 million, up by 1.7 percent from a year earlier and some €7 million more than expected by financial analysts. No indications were given about the group’s profitability at this stage. 

The Italian group’s chairman and co-chief executive, Diego Della Valle, stressed that it is “essential to continue to invest heavily to be competitive and to support the brand awareness of our brands.” He pointed out that the group’s objective is to “quickly create an omni-channel group model, which allows us to sell products through our direct distribution, the best e-tailers and our department store partners.” The contribution of “classic wholesale” will continue to be less relevant and the group “is prudently” reducing it. 

The group now achieves more than 70 percent of its sales through directly-operated stores (DOS) and its own e-commerce platform – a ratio which is nearly as high as that of some Kering’s brands and others in the luxury goods sector. Boosted by the internet, it’s a general trend in the industry that Americans call a development of direct-to-consumer (DTC) operations. 

Della Valle noted that even if the strategy “will temporarily reduce the turnover, we believe it is the right thing to do, in order to be able to completely control the distribution policy of our group, worldwide.” Barring the unpredictable impact of the coronavirus epidemic, Della Valle believes that the group “can optimistically look at the current year, confident that the path followed is the right one.” 

In the full 2019 year, sales were down by 2.6 percent to €916.1 million, dropping by 3.7 percent at constant currency rates. All brands suffered a decline, except Roger Vivier

For the Tod’s brand, sales declined by 7.4 percent to €461.8 million, with currency-neutral revenues down by 8.7 percent. Sales through its DOS and proprietary e-commerce platform were positive. The brand also enjoyed a “healthy start” for its new T Timeless collection, for both shoes and leathergoods. 

Roger Vivier rose by 15.6 percent to €200.6 million, with gains in all regions. In local currencies, the brand’s revenues advanced by 13.8 percent. The Hogan brand fell by 4.7 percent to €196.5 million, declining by 5.0 percent on a currency-neutral basis, but the label enjoyed double-digit growth rate in Greater China. The Fay brand’s revenues decreased by 8.2 percent to €56.3 million. 

By product category, sales of footwear products were down by 1.7 percent in the full year to €730.8 million, while leathergoods and accessories fell by 5.4 percent to €121.7 million. In local currencies, revenues for footwear were down by 2.8 percent, and leathergoods and accessories retreated by 7.3 percent. 

In Italy, the group’s overall revenues fell by 7.6 percent to €260.7 million, but the trend was positive in the fourth quarter in both the retail and wholesale channels. Sales in the rest of Europe were down by 2.6 percent to €237.6 million, with constant-currency revenues down by 2.9 percent. Fourth-quarter revenues were positive, driven by own retail. 

In the Americas, group revenues fell by 3.3 percent to €70.6 million, and the decline widened to 7.0 percent in local currencies. As in Italy and the rest of Europe, sales recovered in the region during the fourth quarter. 

Sales in Greater China went up by 2.3 percent to €215.1 million, but the increase narrowed to 0.4 percent on a currency-neutral basis. The positive performance in mainland China offset a sharp decline in Hong Kong due to the social unrest hitting the city. 

Revenues in the rest of the world rose by 0.8 percent to €132.1 million but dropped by 1.4 percent in local currencies. 

The group had 290 DOS and 115 franchised stores at the end of December against 284 DOS and 120 franchisees a year earlier. Nevertheless, combined retail revenues through the DOS and the group’s e-commerce platform grew by 6.3 percent to €645.9 million in 2019, with revenues in local currencies up by 4.8 percent. In the fourth quarter, adjusted sales rose by 4.4 percent thanks to a double-digit growth rate for e-commerce and the contribution of new store openings. 

For the whole of 2019, the DOS’ same-store sales growth fell by 4.0 percent at constant currency rates, but the trend was positive in terms of euros. 

In the full year, sales to franchisees and wholesale accounts dropped by 18.8 percent to €270.2 million, which was attributed to the weakness of the market in Italy and the rest of Europe. At constant currency rates, the rate of the decline was even higher at 19.3 percent.