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Tod’s economic indicators all down at end 2016, store closures on the cards

Translated by
Nicola Mira
Published
today Mar 16, 2017
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The performance of Italian luxury footwear label Tod's in 2016 was very disappointing, and the group is seeking to right its course this year. All of Tod's economic indicators were down at the end of last year, and the group is pinning its hopes on a new store concept, a strengthening of its e-tailing business and of digital communications, and on organic store growth, as illustrated in the press release issued for the publication of Tod's annual results.


While Tod's apparel sales grew in 2016, those of accessories and footwear slumped - © PixelFormula


During a phone interview with financial analysts, group CFO Emilio Macellari explained that the start of 2017 has confirmed the improvement glimpsed in the fourth quarter 2016, especially in mainland China, where sales rebounded earlier this year after plummeting in the recent past.
 
However, the group will be forced to streamline its store network, and plans to close down between four and six stores this year, and to open only between nine and 13 new ones, compared to 15 in 2016 and 25 in 2015.

The Italian fashion group, owner of the Tod’s, Hogan, Fay and Roger Vivier labels, reported a revenue of €1.004 billion in the 2016 fiscal year, down 3.2% (-3.8% at constant exchange rates), a decline consistent across nearly all of its markets.
 
Last year its net income was €86.3 million, losing 6.9% compared to 2015, while EBIT was €128.3 million (-13.6%) and EBITDA reached €180.9 million (-10.7%). The latter figure is a fraction above the €179 million figure agreed on among the analysts interviewed by Thomson Reuters, with gross margin standing at 18% of total revenue, compared to 22.7% a year earlier.
 
Last year the company led by Diego Della Valle began to deploy a cost-reduction policy which is however expected to start bearing fruit in 2017. "Thanks also to a strengthened management team, we are confident in believing that we will achieve improved results already during the current fiscal year," wrote Tod's in the press release.
 
According to the group's CFO, in 2017 Tod's is expected to be able to reach its target of €1.040 billion in revenue and of €193 million in EBITDA.

Sales for the leading brand, Tod's, have notably fallen by 6.7% due to "the significant slump in store footfall," while Hogan’s sales lost 3.2% owing to a decrease in Italian consumer expenditure. Instead, Fay and Roger Vivier ended 2016 with a flourish, growing by 5.3% and 6.6% respectively, despite the decline in tourist customers. In terms of channels, the worst affected was the group's own-store network, whose sales fell by 4.3%.

Accessories and footwear both lost ground in 2016, while apparel sales, which were worth €68.3 million, rose by 2.2% in the same period.

The group has proposed a dividend of €1.70 per share for the 2016 fiscal year.

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