Struggling Italian fashion company Tod’s could further strengthen its ties with LVMH but there are no ongoing talks and no decision has been made, a top Tod’s executive said after the French giant increased its stake in the group.

Last month’s announcement that industry leader LVMH would raise its holding in Tod’s to 10% has fuelled market talk it could help relaunch the Italian brand and eventually take it over.

Tod’s finance chief Emilio Macellari told analysts in a post-results conference call the two groups “spoke the same language” and could co-operate further, both from an industrial and commercial point of view, citing for example the possibility of sharing space in shopping malls.

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“It is a reasonable possibility that something in the future can be done together,” he said. But, seeking to dampen expectations that any announcement may be imminent, he added: “There is nothing already decided or discussed with LVMH.”

Tod’s Chairman and founder Diego della Valle has been an LVMH board director for the past two decades and is a friend of LVMH’s billionaire boss Bernard Arnault, who has built his empire through a string of acquisitions.

Tod’s reported a rebound in first-quarter sales, which grew by 19% from a year earlier when stripping out currency fluctuations and were powered by a 142% jump in China - the first region to be hit by the coronavirus crisis but also the first to re-open shops and relax travel curbs.

Overall revenue for the period came in at 178.7 million euros ($215.76 million) slightly above analyst forecasts of 168 million euros, but still below the 216 million euros mark reached in the first quarter of 2019.

Revenue fell 15% in the Americas and also posted a double-digit decline in Europe, where new lockdowns were imposed in the first part of this year.
Last year, the fallout from the pandemic triggered a revenue fall of almost a third for Tod’s, one of the worst performances in the sector, marking the fifth year in a row of falling annual sales for the group known for its loafer shoes.

However, shares in the group have rallied to rise 57% in just over a month, boosted by news of the LVMH stake acquisition and also by news that Italian influencer Chiara Ferragni would join the board - a move which Macellari said was also meant to help Tod’s lure younger customers.

Macellari said the group was confident it would meet a consensus forecast for 741 million euros in sales this year, which would be 16% higher than last year.

“It’s totally feasible,” he said.