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Tod's closes the year with 2.6% decline in sales

Feb 5, 2020 Italy
Tod's closes the year with 2.6% decline in sales
The luxury shoes and leather goods company announced declining sales for 2019 (-2.6%). However, the business started to pick up in the last quarter with an improvement in the revenue trend
Diego Della Valle, Chairman and CEO of the Group, commented: “The results of the last quarter showed an improvement in the revenue trend, despite the negative effects regarding the Hong Kong market. We are starting to register the first positive signs of the strategy adopted at the time. We consider an absolute priority to protect the great quality of our products, the refined Italian lifestyle and, increasingly, the creative component, that attracts new consumers, who love to surround themselves with special things. The competition in the luxury sector is getting stronger, and therefore, we must be able at having always special and desirable products. The arrival of the new Creative Director of the Tod's brand, which will coordinate the work of the style office, will serve to emphasize these codes. For the time being, it is also essential to continue to invest heavily to be competitive and to support the brand awareness of our brands, especially in consideration of the increasing importance of the new markets, which require great attention. Our goal is to quickly create an Omni-channel group model, which allows us to sell products through our direct distribution, the best e-tailers and our department store partners. The contribution of classic wholesale will be less and less important for us and we are prudently trying to decrease it. Even if this strategy will temporarily reduce the turnover, we believe it is the right thing to do, in order to be able to completely control the distribution policy of our group, worldwide. Excluding any repercussions, currently unpredictable, of the ongoing epidemic, we believe that we can optimistically look at the current year, confident that the path followed is the right one”.

Fiscal Year 2019

Tod's consolidated sales in 2019 totalled 916.1 million euros, down by 2.6% from 2018. Revenue amounted to 238.4 million euros in the fourth quarter of 2019, up by 1.7% from similar quarter in 2018. In the current year, currency fluctuations gave a positive contribution, particularly to the Tod’s and Roger Vivier brands, which have the greatest presence abroad. At constant exchange rates, meaning by using the average exchange rates of 2018, sales would have reached 905.7 million Euros.

Sales by brand

Tod’s sales totaled 461.8 million euros in 2019 (a 7.4% decline in reported rates from the previous year) with positive results in the retail channel. Healthy start of the new T Timeless project, both for shoes and for leather goods. Revenues of Roger Vivier amounted to 200.6 million euros, up by 15.6% from 2018. The brand registered positive results in all the geographical areas in which it operates; excellent feedback on new product families. Hogan sales totalled 196.5 million euros, declining by 4.7% in reported rates, but with double-digit growth in Greater China, despite the delicate situation in Hong Kong. Finally, sales of Fay amounted to 56.3 million euros; a decrease of 8.2% when compared to 2018, mainly driven by the weakness of the Italian market.

Sales by product

Revenue declined across all categories of products. Revenue from shoes amounted to 730.8 million euros in 2019, with a positive trend registered in the fourth quarter of the year, but with overall decline of 1.7%. Sales from leather goods and accessories totalled 121.7 million euros (-5.4%). The new lines of handbags of the Tod’s brand are registering positive feedback. Finally, sales from apparel amounted to 62.7 million euros, decreasing by 6.7% from the previous year.

Sales by market

In 2019, domestic sales amounted to 260.7 million euros; the performance in the fourth quarter of the year was positive, with an improvement in the trend of both distribution channels. In the rest of Europe, the group’s revenue totaled 237.6 million euros; the fourth quarter of the year was positive, thanks to the contribution of retail. In the Americas sales amounted to 70.6 million euros; also in this region, the fourth quarter registered a positive performance, with an improvement in results on both the distribution channels. Italy, Europe and the Americas all registered declines in the period. Tod’s sales in Greater China totaled 215.1 million euros,  up by 2.3% from 2018. The positive results recorded in Mainland China, which represents more than 60% of this region, were offset by the sharp slowdown in the Hong Kong market, due to well-known political tensions. Finally, in the area Rest of the World the group’s revenue was 132.1 million euros, up by 0.8% from 2018.

Sales by channel

In 2019, retail revenue totalled 645.9 million euros, up by 6.3% from 2018, and representing more than 70% of the group’s turnover. On a homogeneous basis, the increase in sales of this channel was 4.4% in the fourth quarter of the year, thanks to the double-digit growth of e-commerce and the contribution of the new openings. The Same Store Sales Growth (SSSG) rate, calculated at constant exchange rates as the worldwide average of sales growth rates registered by the DOS network, is -4.0% in the year, progressively improving in the last months.

As of the 31st of December 2019, the group’s distribution network was composed by 290 DOS and 115 franchised stores, compared to 284 DOS and 120 franchised stores in the previous year. Revenue to third parties totaled 270.2 million euros; the double-digit decline mainly due to the weakness of the domestic and European markets.

Note: all the figures related to FY 2019 sales reported are preliminary and unaudited. FY 2019 results will be approved by the Board of Directors scheduled to take place on the 12th of March 2020.

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