The management of Tod's said that it is comfortable with financial analysts' expectations of an increase of about 5 percent in this year's sales to nearly €1,090 million. The company estimates that it will continue to benefit from foreign currency exchange rates, but the impact will be less significant than in 2015. It is assuming a €10-20 million lift from currency movements, representing about one to two percent of the 2016 top line.
In 2015, the company's revenues grew by 7.4 percent to €1,037 million. But at constant currency rates, they were up by only 1.8 percent, as already reported (see Shoe Intelligence Vol. 18, No. 2+3 of Feb. 13 for more details on the turnover).
In a conference call earlier this week, Emilio Macellari, the chief financial officer of Tod's, also said that the company could achieve market expectations of a gross operating margin before amortization (Ebitda) of 20.7 percent this year, compared with a reported 19.5 percent in 2015. Currency rates would boost the Ebitda margin by 0.8 to 0.9 percentage points this year, down from 1.1 percentage points in 2015, when the Ebitda margin stood at 18.4 percent at constant currency rates.
The company kept its word by no longer releasing interim same-store sales data, which previously covered the opening weeks of the year. The figures will now be released on a quarterly basis along with the headline results. However, Macellari hinted that the promotional sales of the last autumn/winter collection registered a low double-digit decline in comparable sales, while the start of the spring/summer season booked positive same-store sales. On aggregate, comparable sales figures were slightly worse than the 6.0 percent decline at constant currency rates registered for the whole of 2015.
Hong Kong was the worst performer among the main markets in terms of comparable store sales, while mainland China is stabilizing. The U.S. and Japan are slowing down, while Europe is showing signs of stability and Italy is growing. Regarding Hong Kong, the group said that the city has seen a sharp fall in tourists who now prefer to shop in South Korea or Japan where they can buy the same products 15-20 percent cheaper thanks to convenient exchange rates.
Macellari added that the start of the ordering campaign for the next autumn/winter collection has been “more than encouraging,” with the clients that have already placed orders increasing their requested quantities.
The group also announced a sharp cut in its retail expansion, with only 15-20 new openings of directly-operated stores (DOS) programmed for this year, which will be accompanied by a couple of closures. In 2015, the company opened 31 stores and closed six locations, leading to 25 net openings.
At the end of December, the group had a network of 257 DOS and 98 franchised stores, up slightly from 255 DOS and 95 franchises at the end of September and compared with 232 DOS and 93 franchisees a year earlier.
The operating margin after amortization (Ebit) narrowed for Tod's to 14.3 percent last year from 15.3 percent in 2014 as the improvement in the gross margin was more than offset by higher rents, which represented 12.4 percent of sales in 2015 against 11.4 percent in 2014, and by higher personnel costs - 17.7 percent of revenues compared with 16.6 percent. The group's staff rose to 4,558 employees at the end of 2015 from 4,297 a year earlier.
The net profit fell by 4.5 percent to €92.7 million, missing the market consensus of €101 million. The company maintained its dividend unchanged at €2.0 per share, despite a higher number of outstanding shares following the capital increase implemented to finance the purchase of the Roger Vivier brand (see Shoe Intelligence Vol. 18, No. 1 of Jan. 14). The group will thus distribute 71 percent of its profits in dividends against 63 percent a year earlier.
Investments slipped to €47.9 million last year from €64.5 million in 2014 and the cash pile rose to €134.2 million at the end of December from €130.0 million a year earlier.