Tod’s, the Italian luxury footwear company, has decided to launch the first collection of clothing under its core brand. Designed by an American of Chinese origin, Derek Lam, this small line of 16 items was presented during the Paris women’s ready-to-wear shows earlier this month.
In effect, the group is already in the apparel business through another brand, Fay, which recently added shirts, trousers and T-shirts to its traditional line of jackets and overcoats. By introducing clothing under the Tod’s brand name, Diego Della Valle, the key man behind the company’s strategy, is following in the footsteps of Gucci and Prada, which have already launched their apparel lines many years ago next to their leathergooods to support their brand image in the catwalks.
On the other hand, Della Valle has restated the group’s corporate goal to double the contribution of handbags and other high-margin accessories to the total turnover. They should represent 35-40 of the total sales mix in the future, up from the present rate of 22 percent, while footwear should see its share decline from its present level of 40-45 percent.
For its 1st half ended June 30, Tod’s saw excellent results across the board. The Italian luxury goods group’s net income rose by 44.1 percent to €20,300,000 million on the previously reported 22.9 percent increase in revenues to €239.0 million.
As indicated before (Shoe Intelligence of Aug. 25), the leathergoods and accessories division had the biggest growth during the 6-month period, posting a 35.5 percent sales gain. The footwear segment remained the largest contributor to the overall turnover, with sales climbing by 20.3 percent. Apparel sales increased by 15.9 percent.
The group’s gross operating profit (EBITDA) jumped by 34.3 percent in the 1st half, raising its mrgin on sales to 19.8 percent from 18.0 percent in the same period last year, based on IFRS rules. Tod’s attributes the improvement to a lower proportion of externally producted items - down too 8.3 percent from 9.8 percent - and a 1.7 percentage point decline in personnel costs to 15.5 percent of revenues.
Tod’s earnings before taxes (EBIT) rose by 48.1 percent to €35.5 million in the 1st half, thanks mainly to a drop in the group’s amortization and depreciation to 4.8 percent as compared to 5.5 percent in the year-ago period. Total earnings before taxes grew by 45.9 percent to €35.8 million in the first six months of 2005, with a 15.1 percent margin on sales.