Tod’s 2020 Sales Impacted by Effects of COVID-19 Pandemic

MILAN — Solid double-digit growth in its online business and in China in the fourth quarter failed to offset a fall in revenues for the full year at Tod’s SpA, which was impacted by the effects of the COVID-19 pandemic.

In the 12 months ended Dec. 31, the Italian luxury group reported a 30.4 percent decrease in preliminary sales, which amounted to 637.2 million euros, compared with 916 million euros in 2019.

In the fourth quarter, sales were down 22.6 percent to 184.5 million euros, compared with the same period in the previous year.

“The results for the fourth quarter show a strong unevenness in the various areas of the world: China continued to grow in double digits, while the Western world, after a modest improvement in October, suffered a further slowdown due to further lockdowns imposed by local governments to deal with the flare-up of infections,” said chairman and chief executive officer Diego Della Valle. “We are satisfied with the results achieved in the e-commerce channel, which recorded a gradual acceleration during the year and achieved revenues that are in the highest range of our expectations. This confirms the strong interest from our customers in our products.”

The group comprises the Tod’s, Roger Vivier, Hogan and Fay brands.

Della Valle said the company was receiving “excellent feedback” on all the new collections, and said it continues to “pay close attention to cost control and to adopt great prudence in delivering goods to stores, especially to the wholesale channel, which is experiencing a difficult time. Our primary goal is to consolidate our communication strategy, particularly the digital one. We are well advanced; when the markets return to normal, we will be ready to begin a lasting growth cycle.”

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Tod’s also revealed it had signed a credit agreement with a pool of banks, coordinated by Intesa Sanpaolo SpA with IMI Corporate and Investment Banking Division, for a maximum total of 500 million euros. The sustainability-linked loan has a five-year maturity and is structured in a term facility of 250 million euros and a revolving credit facility of an additional 250 million euros.

“We have further strengthened our capital structure, to be ready to evaluate any opportunities that the market can offer in times like this,” continued Della Valle. “Obviously, the health of our people and support to those in most difficulty at the moment remains the first objective of all of us, respecting the ideas and the tradition of our group.”

By brand, Tod’s sales fell 35.6 percent to 297.5 million euros in 2020. Revenues of Roger Vivier were down 20.2 percent to 160 million euros. Sales of Hogan decreased 28 percent to 141.6 million euros and those of Fay were down 33.3 percent to 37.6 million euros.

Sales of shoes, the group’s core category, fell 29 percent to 519 million euros. Leather goods and accessories dropped 39.6 percent to 73.4 million euros. Sales of apparel were down 29.4 percent to 44.3 million euros.

By region, sales in Italy fell 37.2 percent to 163.7 million euros. Revenues in Europe, excluding Italy, amounted to 149.6 million euros, down 37 percent. Sales in the Americas tumbled 48.2 percent to 36.6 million euros. Greater China reported a more contained drop, as sales decreased 8.7 percent to 196.5 million euros. The Rest of the World area was down 31.3 percent to 90.8 million euros.

“In mainland China the performance was definitely positive and revenues recorded solid double-digit growth, gradually accelerating, while the results of Europe and the U.S. were impacted by the closures imposed by the lockdowns and by the very low traffic even during the opening periods, given the absence of tourist purchases,” the company said.

As of Dec. 31, the group’s distribution network comprised 300 directly operated stores and 103 franchised units, compared to 290 DOS and 115 franchised stores at the end of December 2019.

Last year, retail sales amounted to 448.8 million euros, down 30.5 percent compared with 2019, affected by the pandemic and the lockdowns around the world. The company reported a slight improvement of its retail channel in the fourth quarter compared to the third quarter. The average store opening rate fell from 98 percent in October to 83 percent in November and 87 percent in December.

Wholesale revenues fell 30.3 percent to 188.4 million euros. The group did not see a positive uptick in this channel, one that Tod’s has been streamlining for some time and that has seen “a structural downsizing, especially in Europe and the U.S. The result for the quarter was also influenced by a different timing of deliveries and shipments between the different quarters of the year.”

Without providing additional details, Tod’s said the e-commerce channel “continued its very strong double-digit growth, with a further acceleration in the fourth quarter of the year, and generated particularly positive results.”

This credit facility “further strengthens the already solid group’s financial structure and mitigates the risk profile deriving from the current market situation and contains a rewarding mechanism linked to specific ESG [environmental, social and governance] indicators,” the company said.

Similarly, as reported, last year Moncler signed a financing credit line granted by Intesa Sanpaolo SpA for a maximum amount of 400 million euros and based on a rewarding mechanism linked to the achievement of environmental impact reduction targets.

Prada will be granted 50 million euros over five years through a Sustainability Term Loan, introducing a rewarding annual pricing adjustment based on the achievement of sustainability targets.

Salvatore Ferragamo SpA signed a financing credit line granted by Intesa Sanpaolo SpA for a maximum amount of 250 million euros that is also linked to the luxury brand hitting certain sustainability targets.

Full 2020 results will be approved by Tod’s board of directors on March 10.

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