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Tod's with 29.4% drop in sales

May 25, 2020 Italy
Tod's with 29.4% drop in sales
The Italian-based luxury group had a strong start of the year, until the outbreak of the pandemic. Group sales totaled 152.8 million euros in quarter one, down by 29.4% in the first quarter of 2019
“We had a strong start of the year, with revenue growth in all regions, confirming that the work done was beginning to produce its results. The outbreak of the epidemic in China and its rapid spread all over the world have changed every perspective and forced us to review everything, giving priority to many ne  problems, often unknown, that we had to manage suddenly. Our first absolute goal was to protect the health of our employees and their families, managing the closures of the production plants, offices and stores all over the world. And this is still our first target also today. In the meantime, given the impossibility of predicting and governing the future, we have decided to be very prudent, trying to limit our inventories, to avoid generating unsold stock due to lack of demand, and the related consequences. As far as the second half of the year, we will remain very prudent, but with great attention to the evolution of the markets, to be ready and responsive to the first positive signs. We are paying great attention to strategies of cost cutting and increasing efficiency, that will give us good results”, commented Diego Della Valle, Chairman and CEO of the Group.

First Quarter Results

In the first quarter of 2020, Tod's consolidated sales totalled 152.8 million euros, down by 29.4% from quarter the first quarter in 2019. Currency fluctuations gave a small positive contribution; at constant exchange rates, meaning by using the average exchange rates of the first quarter of 2019, including the related effects of hedging contracts, sales would have been 152 million euros, down by 29.7% from similar period in 2019. After a good start of sales in the first weeks of the year, the results of the stores were visibly influenced by the outbreak of the Covid-19 pandemic, given the progressive closures of retail businesses in all geographic areas and the drop of traffic from tourists. More specifically, at the end of January the first store closures began in China and the flow of tourists from that area was blocked, with a negative impact on the traffic worldwide. Starting in March, the store closures were extended to Europe and, subsequently, to America. Only in mid-March, stores in China were progressively reopened, with a gradual recovery of activity. The impact of the pandemic significantly affected sales results for all Group’s brands, regions, product categories and distribution channels. 

Sales of the Tod's brand have declined by 31.7% in the first quarter of the year and represent 47.5% of total sales. This underperformed the group's overall performance (-29.4%). Hogan's sales fell by 26.4%, Roger Vivier by 30.8% and 19.2% was the decline for the Fay business.

Leather goods took the bigger hit in the first quarter, going from 27.6 million euros in quarter one in 2019 to 17.9 million euros in the first quarter in 2020 (a 35.1% decline). Footwear, representing 80% of total sales in quarter one fell by 29.5%

In the first quarter the impacts of the Covid-19 crisis were already felt in all markets of the group. A decline of 47.2% was registered in Greater China (includes mainland China, Hong Kong, Macao and Taiwan). Declines above 21% were registered in all regions (26.8% in Italy).

As of the 31st of March 2020, the group’s distribution network was composed by 291 DOS and 114 franchised stores, compared to 283 DOS and 118 franchised stores as of the 31st of March of 2019. A drop of 33.3% was registered in sales by the retail channel (DOS and online). 22.3% was the drop in third parties' stores' sales (franchising stores and independent retailers).

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