Keeping a promise made to investors, Tod's reported increased sales for the full 2009 financial year, but the level was lower than what financial analysts had anticipated, and this sent the share price plummeting. According to preliminary figures, the Italian fashion group ended 2009 with sales up by 0.8 percent to €713.1 million, while the market was anticipating revenues of more than €720 million.

The day following the announcement, which was made when the Milan stock exchange was closed, the company's share price dropped by 8.47 percent to €48.30, but has since then recovered slightly to trade around €48.65.

Sales continued to be underpinned by the Hogan brand and the Italian market. But, the bank Citigroup expressed concern about the slowdown in the company's expansion in Italy. The country represents nearly 57 percent of Tod's sales and has been fundamental in the company's growth over the past five years.

The bank's analysts feel that the slowdown in the domestic market can be only partially explained by a reduction in the company's investments in marketing and promotion, and that the business model may be showing its limits and the trend could worsen in 2010.

Yet, Tod's chairman, Diego Della Valle, expressed satisfaction about the results. In an interview with the Italian daily Il Sole 24 Ore, he noted that sales of products at full list prices increased during the year. He added that the group has an enormous potential to grow organically and that several new projects are ready to be launched when the market picks up.

He added that 2010 investments will be roughly in line with 2009 and that the group will open ?very important? stores in Los Angeles and Munich this year. The group's previous guidance, released with the third-quarter results, was for maximum capital expenditures of €23 million in 2009 and about €30 million in 2010.

Della Valle underlined that the group will continue to limit promotional sales in 2010, as part of its policy to defend the positioning of its brands, and that orders for the 2010 spring/summer collection are showing very positive signs, but added that it is premature to give out a forecast.

Consumer confidence is improving in the most depressed markets. Tod's highlighted that in the fourth quarter, the U.S. market confirmed the improvement registered in September.

By region, group turnover increased by 5.5 percent to €405.1 million in Italy for the full year. This compares with a 7.3 percent rise in the first nine months of the year. Sales fell by 6.4 percent to €150.7 million in other European countries, slipped by 21.7 percent to €46.4 million in North America and increased by 7.5 percent to €110.9 million in Asia and the rest of the world.

Full-year sales by brand showed that Tod's fell by 2.2 percent to €348.8 million, Hogan increased by 7.6 percent to €256.9 million, Fay was down by 1.7 percent to €91.6 million and Roger Vivier dipped by 11.0 percent to €15.0 million. Revenues from other brands dropped to €0.8 million from €2.1 million.

Footwear sales were up by 4.2 percent to €506.1 million across the group. Revenues from leathergoods and accessories declined by 12.0 percent to €111.4 million, apparel sales rose by 0.5 percent to €95.0 million and other revenues dropped to €0.6 million from €0.9 million.

By channel, wholesale revenues generated by sales to third parties and franchisees fell by 2.1 percent to €364.2 million, while sales generated by directly operated stores (DOS) rose by 4.0 percent to €348.9 million. On a same-store basis, the DOS averaged a 0.2 percent decline during the year, but some improvements were recorded in November and December.

At the end of 2009, the group had 149 DOS and 78 franchisees, compared with 150 DOS and 71 franchisees a year earlier.

Tod's is scheduled to release complete full-year results on March 24. According to Della Valle, they will show an improvement in operating profit before amortization (Ebitda), inventory levels and net cash. Analysts expect Ebitda to be slightly higher than the €156 million level of 2008, while the cash pile is seen surging to above €120 million from €106.3 million at the end of September.