After the company’s sales rose by 7.7 percent to €707.6 million in 2008, its growth is likely to come to a halt this year. At constant currency rates, sales were up by 9 percent for the Tod’s group last year.

During a conference call, the company said forecasts by financial analysts that sales could be flat or slightly negative this year were reasonable. The average of estimates sets 2009 sales at around €705 million, puts earnings before interest, depreciation and amortisation (Ebitda) at €147-148 million, and forecasts net profits at about €78 million.

Last year’s results were already below expectations, as analysts had forecast sales of about €709 million, Ebitda of €159 million and a net profit of €85 million. Tod’s 2008 sales were in line with the preliminary figure released on Jan 30.

The company indicated that in the first 11 weeks of the year to March 15, comparable store sales at its directly operated stores rose by 0.6 percent and that wholesale orders for the 2009 spring/summer collections enjoyed low-single digit growth. Meanwhile, orders for the 2009 fall/winter lines, which have reached 35-40 percent of the group’s budget, seem to confirm the full-year sales forecast made by financial analysts. A Milan-based bank, Abaxbank, forecast full-year revenues slipping to €704 million, with comparable DOS sales flat and wholesale turnover down by 2.3 percent.

In view of the slowdown, Tod’s is reducing its investment programs, which will absorb €20-21 million compared with €40.8 million in 2008 and €45.2 million in 2007. The bulk of the investment is going toward the group’s directly operated stores (DOS), only three or four of which are set to open this year compared with 25 in 2008.

At the end of 2008, Tod’s had 150 DOS and 71 franchises. The group is focusing on developing its retail network in Asia, where prices and margins are higher thanks to an average mark-up of three times compared with an average of 2.3 for Italy and 2.5 in the rest of Europe. Last year, Tod’s opened 17 DOS in China, five of which were converted from franchised stores. It also inaugurated its first three DOS in India.

On the production front, the company has postponed the construction of a factory for leathergoods in Tuscany. Tod’s has six production units, all located in Italy, that produce up to 65 percent of its shoes and about 40 percent of handbags and other leathergoods. The rest of the production is manufactured by third parties.

The group’s Ebitda rose to €156.2 million from €153.0 million but the operating margin declined to 22.1 percent of revenues from 23.3 percent as sales of handbags and leathergoods fell by 9.1 percent to €126.6 million. Shoe sales rose by 13.7 percent to €485.6 million and apparel sales increased by 5.9 percent to €94.5 million, as previously reported.

According to Abaxbank, bags and small leathergoods have an Ebitda margin 5.0-10.0 percentage points higher than shoes, while apparel is estimated to have margins between footwear and leathergoods.

Ebit was virtually flat for the Tod’s group last year, rising to €126.6 million from €126.5 million, but net profits increased to €83.4 million from €77.3 million thanks to a lower tax rate of 32.8 percent. The company maintained its dividend unchanged at €1.25 per share.

Tod’s began to cut back some of its investments last year. According to Pambianco, an Italian management consultant, its expenses on advertising fell in Italy by 29.6 percent, in contrast with those of four other major spenders: those of Geox rose by 8.7 percent, Alberto Guardiani by 29.5 percent, Fratelli Rossetti by 31.3 percent and Café Noir by 26.6 percent.

Geox had the biggest investment at €1.9 million, followed by Tod’s with an investment of €1.6 million. The three other brands had all investments of around €1.4 million. Overall, the advertising expenses by the 328 Italian shoe brands covered by Pambianco’s panel increased by 12.6 percent in 2008 reaching €68.3 million.