Italian luxury leather goods group Tod’s Group plans to continue to scale back store openings this year and look at e-commerce opportunities.
Profits have fallen, despite a rebound in sales in Greater China.
Announcing its results for last year, CFO Emilio Macellari says Tod’s will cut back store openings to between nine and 13 this year, compared with 15 openings in 2016 and 25 the year before. The group will also close about four to six stores this year.
Chairman/CEO Diego Della Valle says the group is highly focussed on organic growth for its stores and on the opening of some “new generation stores,” which he says will offer “a new shopping experience”.
Tod’s has been working on enhancing the in-store experience. During Paris Fashion Week, for example, it celebrated Tod’s Tattoo, its collaboration with tattoo artist Saira Hunjan (pictured above) on a capsule collection of handbags and shoes. Unveiled in London in September, the tie-up was celebrated with a pop-up space in the brand’s Paris flagship, complete with the UK-based artist’s designs on the walls.
Regarding the group’s digital division, Della Valle says it will be more and more a key factor of success. E-commerce represents 3 to 4 per cent of sales for Tod’s Group, which compares to 4 to 5 per cent on average for the luxury goods sector as a whole.
“As far as e-commerce is concerned, our structure will become even more efficient, ready to catch all the opportunities the market will offer,” says Della Valle.
Based in the Italian commune town Sant’Elpidio A Mare, which is also home to the Fay, Hogan and Roger Vivier brands, Tod’s Group reported a drop in net profit and margins for last year as a result of the purchase of Roger Vivier and a rise in labour costs. The average number of employees rose to 4514 last year, compared to 4464 the previous year.
“Mainland China is finally rebounding compared to a very bad situation in the past couple of years,” says Macellari. Earlier this year, the group said Hong Kong sales pulled down the rest of the Chinese market.
Net profit last year was €86.3 million (US$96.1 million) versus €92.7 million the previous year. Earnings before interest, taxes, depreciation and amortisation also dipped, with an 18 per cent margin, down from 19.5 per cent in 2015.
Preliminary figures show that in the 12 months to December 31, sales fell 3.2 per cent to €1 billion, compared with €1.03 billion in the previous year – attributed to a slowdown in tourism.
Greater China sales fell 6.8 per cent to €210.3 million. South Korea had solid double-digit revenue growth while Japan was broadly flat.
Macellari says he is confident the group will not disappoint this year with improved sales performance and cost efficiencies.