After a string of disappointing quarterly sales figures, Tod's beat market expectations by about €2 million in the third quarter, resulting in a top line of €677.7 million for the first nine months of the year. However, sales were down by 4.0 percent on a reported basis and down by 5.0 percent at constant currency rates as compared to the year-ago period.
The company's chairman and joint chief executive, Diego Della Valle, said that the results were “substantially in line” with the company's own expectations, adding that he was “very satisfied” with a capsule collection developed in collaboration with a well-known Israeli designer, Alber Albaz, which is currently sold in the company's stores.
Della Valle described the company's distribution network as “excellent” and said he expected comparable store sales to grow in the future. He said he was satisfied with the rapid growth posted by the e-commerce business, adding that it enjoys “excellent future prospects.”
The group had 290 directly operate stores (DOS) and 111 franchised stores at the end of September against 279 DOS and 118 franchisees a year earlier. In the first nine months of 2019, same-store sales fell by 4.7 percent, but they were off by only 1 percent in constant currencies.
Given the “highly competitive” business context and the company's goals, it is important to accelerate investments to support sales growth, Della Valle added. “Assuming no further turbulence from the markets, we believe that we will soon be able to obtain the expected results,” he concluded.
Tod's estimates that it can meet market expectations for full-year sales of €909 million but admits that achieving a projected Ebitda of €59 million could be “challenging.”
In the first nine months of the year, all the firm's brands witnessed declining sales, except Roger Vivier, whose sales rose by 13.0 percent to €144.0 million. In local currencies, they advanced by 11.4 percent with gains in all regions with the exception of the U.S.
For the Tod's brand, sales were down by 8.5 percent to €344.3 million, with currency-neutral revenues down by 9.7 percent. The fall was due to the wholesale channel, while results in the retail channel were positive.
The Hogan brand fell by 5.0 percent to €150.3 million, but the brand enjoyed double-digit growth in China. Same-currency sales were down by 5.2 percent. The Fay brand's sales decreased by 11.6 percent to €38.5 million.
By product category, footwear sales were down by 3.4 percent in the first nine months to €543.2 million, while leathergoods and accessories decreased at a higher rate of 4.8 percent to €91.5 million. In local currencies, revenues were down by 4.4 percent for footwear, and by 6.5 percent for leathergoods and accessories.
In Italy, the company's overall revenues decreased by 10.2 percent to €195.3 million, while sales in the rest of Europe declined by 4.4 percent to €176.3 million, with constant-currency revenues down by 4.5 percent.
In the Americas, revenues fell by 6.1 percent to €49.9 million, but the decline widened to 9.9 percent in local currencies.
Sales in Greater China were up by 2.6 percent to €156.4 million, but the increase narrowed to 0.7 percent on a currency-neutral basis. Revenues in the rest of the world were up by 1.2 percent to €99.8 million and down by 0.9 percent in local currencies.