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Jan 30, 2014
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Tod's sales come in lower than forecasts

By
Reuters
Published
Jan 30, 2014

MILAN, Italy - Italian luxury leather group Tod's posted a 0.5 percent rise in 2013 sales on Wednesday, missing analyst estimates due to another steep fall in sales in Italy, its main market.

The group which also owns the Hogay, Fay and Roger Vivier brands, said revenue totalled 979.2 million euros ($1.34 billion) for the full year, compared with a Thomson Reuters SmartEstimate of around 985 million euros.

Tod's current campaign| Source: Tod's

The group, known for its Tod's-branded leather loafers priced at around 300-400 euros a pair, said sales rose 1.7 percent at constant exchange rates.

Chief Financial Officer Emilio Macellari warned in November that it would be hard to reach market consensus estimates for full-year core earnings due to weakness in Italy.

Sales fell 16 percent in the group's home country, which accounts for around 35 percent of its business, dragged down by recession and the planned closures of unprofitable wholesale accounts.

However, analysts see scope for recovery later this year.

"As the customer base becomes homogeneous ... and as possibly the situation in Italy and Europe ceases to deteriorate further, the second half of 2014 should see a recovery in wholesale," Deutsche Bank said in a note on Jan. 20.

Sales in Greater China surged 21.3 percent over the previous year, coming to represent about a quarter of the company's turnover. Revenue climbed 10.5 percent in the Americas.

Tod's said sales of its Roger Vivier brand jumped 52.5 percent, but fell 22.6 percent at Fay, which is the most exposed of all its labels to Italy and the wholesale channel.

Tod's shares have been under pressure in January alongside other Italian luxury goods stocks, due to fears of a slowdown in the sector, and concerns it may be over-valued.

Its shares have fallen more than 9 percent since the end of last year and dropped 1.8 percent on Wednesday, closing before the results were announced.

The company reports detailed full-year results in March. $1 = 0.7329 euros

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