China, Roger Vivier and E-commerce Boost Tod’s Group in Q1

MILAN — Triple-digit growth in China, a strong performance at the Roger Vivier brand and in e-commerce helped Tod’s SpA report a 17 percent increase in revenues in the first quarter of the year to 178.7 million euros, although analysts were especially intrigued by a comment made by Diego Della Valle, chairman and chief executive officer.

Addressing LVMH Moët Hennessy Louis Vuitton’s acquisition of additional shares in Tod’s last month, reaching a 10 percent stake, as reported, Della Valle said in a statement that “this operation consolidates the friendship” between himself, his family and the French group’s chief Bernard Arnault and his family, which has spanned over more 20 years. “We share the values of luxury, quality and products appeal. This may represent an excellent reason to consider further opportunities to be taken together in the future. Despite the challenging global economic scenario, we are facing the current year with enthusiasm and optimism, very convinced of our products and our strategies.”

During a conference call, analysts repeatedly asked chief financial officer Emilio Macellari to clarify Della Valle’s words.

“Although the sentence is self-explanatory, if the question is aimed at knowing if there is an agreement, an internal contract or simple talks about a future cooperation, the answer is ‘no,’” responded Macellari, who pointed to “shared values of luxury, quality and appeal of the product. The [increased] stake is an additional reason to evaluate potential collaborations in the future and if and when that will happen we will regularly inform the market. There is the potential but it is not immediately translated as a deal that has already been done or designed. There is nothing already decided or considered.”

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Further pressed to explain, Macellari said Della Valle “wanted to express the proximity between the leading player in the sector, LVMH of course, and our own capability and expertise, sharing the same passion and attitude. We speak the same language, and as you know Mr. Della Valle has been sitting on the board of LVMH for 20 years, I think. This could generate opportunities to consider industrial or commercial [initiatives], share space in malls, production sites, but all possibilities were not on the table. There is nothing already [planned], but the reasonable possibility that something can be done together.”

LVMH increasing its stake in Tod’s last month immediately stirred speculation that the two groups might increase their cooperation — or that the further concentration of ownership in the hands of Della Valle and Arnault would make it easier for Tod’s to delist its shares and escape the glare of the stock market.

Macellari was also asked to provide additional information on Chiara Ferragni’s appointment as a member of the Tod’s board, which was also revealed last month.

“First of all, it’s really by chance that in a very limited period of time two things happened that seemed related, her nomination to the board and the sale of shares to LVMH in addition to the announcement that Ms. Ferragni has been named brand ambassador for Bulgari [which is owned by LVMH], but they are not at all related,” the CFO said.

Macellari said Tod’s recognizes “a very particular competence” in the digital entrepreneur, in her “great expertise” in identifying and launching sustainability and solidarity projects or ESG activities, “and we consider her an added value. She is particularly able to speak to young people, who can become our customers and we need to reach them to further improve our profitability. We are not targeting commercial collaborations with her as ambassador or testimonial, we are not exploiting her image. Her contribution will be to help us understand the needs and mentality of those clusters we need to reach and speak to.”

Della Valle also commented on the e-commerce performance that was “even higher than our expectations.”

Chief executive officer Umberto Macchi di Cellere said e-commerce grew in the quarter at a very high double-digit pace, “picking up even in the current trend,” and he underscored that this was “not happening only through the increase of the demand, but also thanks to the group’s increased capability to deliver,” offering more omnichannel services and the right infrastructure. He defined this “a real trend, and not only because of the closure of stores.” Customers, he believes, “are more at ease with the channel.”

Della Valle said “excellent results” were reported “in those areas of the world where we were able to keep the stores open, while the results were weaker in the countries of the Western world, penalized by the long periods of closure of the shops.”

In the three months ended March 31, sales in Italy totaled 43.4 million euros, down 6.6 percent compared to the same period last year.

In Europe excluding Italy, revenues decreased 13.1 percent to 37.7 million euros.

Sales in the Americas fell 20.4 percent to 9.3 million euros.

Greater China was a bright spot, with revenues climbing 136.7 percent to 62.8 million euros.

Sales in the Rest of the World area rose 3.4 percent to 25.5 million euros.

The Roger Vivier brand, thanks to its greater exposure to the Asian market, was the best performer in the quarter, with revenues amounting to 48.6 million euros, a 59 percent jump compared to last year. Macchi di Cellere said the label has additional growth opportunities in China and that, “in a neutral situation in absence of external elements such as the pandemic, because it is so exclusive and positioned in the high-end market niche, it is seen as granting higher profitability than the rest of the brands.”

The Tod’s label reported sales of 76.7 million euros, up 5.5 percent compared to the same period last year.

Hogan sales totaled 44.3 million euros, up 11.5 percent, and Fay fell 6.9 percent to 9 million euros.

“We are very happy with the performance of the Tod’s brand and the excellent customer feedback on the new collections, which increasingly combine the DNA of craftsmanship and Italian lifestyle with creativity and innovation,” continued Della Valle. “Roger Vivier maintains [its] originality, with exclusive and highly desirable products, with enormous potential for growth all over the world. The Hogan collections are very appealing and the Fay products are very attractive and aspirational. From this group of brands, supported by strong communication, we expect good news for the future.”

He concluded by saying that “being aware of how crucial digital communication is, we are making important investments in assets and people to have a very strong and quality structure. Our factories are in order and all our employees have shown dedication, professionalism and great courage in managing such a tough period. For this I’m very grateful to them.”

Shoes continued to be the group’s main category, reporting sales of 148.1 million euros, up 19.8 percent compared with last year. Leather goods and accessories rose 8.8 percent to 19.5 million euros. Apparel was down 1.3 percent to 11 million euros.

Retail sales rose 26.8 percent to 117.3 million euros, also driven by the e-commerce channel, while wholesale was up 1.9 percent to 61.4 million euros. The results of the wholesale channel benefited from a different timing of deliveries between the two years, which partially offset the downsizing of the channel, in place worldwide.

As of March 31, the group counted 300 directly operated stores and 99 franchised stores.

“I am really very confident in the future of this group but we must be disciplined and have a cautious approach, be consistent with the strategy we design and implement,” said Macellari. “2021 is a transition year, we will not have the same profitability as 2019, even the top line is not aligned with 2019,” he said, expecting “very good profitability next year, closer to 2019 or even better.”

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