Aug 8, 2013
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Tod's affirms full year guidance after first half profit growth

Aug 8, 2013

MILAN, Italy - Italian luxury shoemaker Tod's expressed confidence it will meet full-year revenue estimates after it returned to earnings growth in a second quarter boosted by its two key brands and a double-digit sales rise in the Americas and Asia.

The company said on Wednesday full-year turnover should grow by 6.4 percent year-on-year to approximately 1.25 billion euros ($1.66 billion), in line with consensus.

Tod's AW14 | Source: Tod's

"I can continue to confirm we are still ok with the consensus both in terms of sales and profitability," Chief Financial Officer Emilio Macellari said on a conference call.

The leather goods maker set up by current chairman Diego della Valle's grandfather posted first-half net profit up 1.8 percent to 75.7 million euros, bolstered by sales up 8.4 percent in the second quarter.

Recession-hit Italy, where Tod's has around 40 percent of its turnover, continued to drag as Italian sales dropped 19 percent year-on-year in the first six months of 2013.

Secondary brands Hogan and Fay, more exposed to the fragile Italian market, drastically underperformed the Tod's and Roger Vivier labels, closing the first half with sales down 14.8 percent and 26.3 percent respectively.

Macellari said that while he expected Hogan to remain negative for the rest of this year, the brand should recover in 2014.

"I think this year will represent the minimum level of sales as far as Hogan is concerned," Macellari said.

Tod's saw sales jump 80.6 percent in the first half at Roger Vivier, the French shoe brand acquired by Della Valle in the mid-1990s and relaunched in 2003.

Macellari said he hoped to start discussions about buying the brand or simply renewing the licence agreement even before it expires at the end of December 2016.

"If the kind of money we are asked to pay is too much or is unreasonable, we are not obliged to buy the brand," Macellari said. "We can go for the second best which is the renewal of the licence agreement."

Shares in Tod's closed 0.54 percent lower on the day, before the results were released, having hit a historic high of 128.80 on Tuesday. The stock has risen 67 percent in the past year.

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