Tod's posted a 5.2 percent decline in revenues to €226.1 million for the first quarter of 2018, in line with the group's and financial analysts' expectations. At constant currency rates, the decline narrowed to 1.8 percent.
On top of adverse currency variations, the group said it suffered from unseasonable weather conditions and an unfavorable merchandising mix, with small handbags currently selling the most. The management expects sales to improve in the second quarter and the start of the summer season, thanks to a special collection of summer products under the Roger Vivier brand name.
Footwear products fared a little better than other types of products. Outlining its sales results by product category, the group reported that its overall footwear sales were down by 4.2 percent in the first quarter to €182.2 million. Leathergoods and accessories fell by 8.5 percent to €29.6 million and apparel sales decreased by 10.2 percent to €14.1 million. In local currencies, revenues for footwear were down by 0.9 percent, while leathergoods and accessories fell by 3.8 percent.
By brands, sales retreated by 2.8 percent to €119.6 million in reported terms for Tod's, but rose by 1.3 percent at constant currency rates. The brand's footwear sales were positive and Tod's posted gains in all markets except Italy, where it continues to be affected by the weakness of the wholesale channel.
The Hogan brand recorded a sales decline of 6.1 percent to €55.7 million, due to the weakness of the Italian market, while sales in the rest of Europe and China were up by double-digit growth rates. On a currency-neutral basis, Hogan's sales were down by 5.2 percent.
Roger Vivier's quarterly sales of €37.8 million showed declines of 8.7 percent in euros and 2.8 percent in local currencies. Sales of the Fay brand of apparel decreased by 12.2 percent to €12.8 million, falling by 12.0 percent at constant currency rates, mainly due to the Italian wholesale channel.
The group's overall sales on the domestic Italian market decreased by 11.6 percent to €70.2 million because of weak sales to third-party retailers, especially in provincial towns. Sales in the rest of Europe were up by 0.5 percent to €57.6 million, with a rise of 1.9 percent in constant currencies.
In the Americas, revenues fell by 8.5 percent to €15.4 million, but rose by 2.3 percent in local currencies, with a positive development in both the retail and wholesale channels.
Sales in Greater China were down by 3.2 percent to €48.7 million, but currency-neutral sales rose by 4.4 percent.
Sales in the rest of the world were down by 1.4 percent to €34.2 million but grew by 3.3 percent in local currencies.
By sales channel, revenues generated by deliveries to wholesale clients and franchisees registered a drop of 2.6 percent to €99.1 million. The decline narrowed to 1.6 percent at constant-currency rates.
Revenues generated by directly-operated stores (DOS) fell by 7.1 percent to €127.0 million, declining by 2.0 percent in local currencies. Same-store sales were off by 4.4 percent in the quarter. In a conference call, the company's chief financial officer, Emilio Macellari, said that comparable store sales were expected to improve in the second quarter and turn positive in the second part of the year. He was even hopeful that the trend could become already positive in the second quarter.
The group had a network of 276 DOS and 118 franchised stores at the end of March, up slightly from 274 DOS and 107 franchisees a year earlier.
In a statement, the group's chairman and joint chief executive, Diego Della Valle, said that “if the new strategic plan implementation continues according to our expectations, we can achieve excellent results in a reasonable time-frame.”
In February Tod's launched the “Factory” project, which aims to propose several collections throughout the year. The group indicated that it might be able to introduce new products every two months.
The stock market consensus is for Tod's to suffer a small dip in its revenues this year to €960 million from €963.3 million in 2017, while pre-tax profit should move up slightly to €104 million compared with €101.9 million a year earlier. Macellari said these expectations are achievable because of the improvements expected for the second half.