Tod’s, optimistic about 2015, cotemplates buying Roger Vivier

By

Dominique Muret

Published
Oct 9, 2014

Tod’s is once again seeing the future through rose-coloured glasses. After recording a turnover and net profit in decline in the first quarter of 2014, the Italian luxury group is anticipating an improvement for the end of the year and growth in 2015.

Such is the optimistic outlook expressed by Emilio Macellari, Financial Director of Tod's, on the occasion of Luxury & Finance 2014 day organised this Thursday by the Milan Stock Exchange.

"For 2014, we had to reach the consensus indicated by the analysts in terms of turnover and profits. The last quarter, which is above all focused on retail, will be decisive. Next year will be better than this one, indeed we are counting on a single-digit increase in 2015," stated the CFO.

This bright spell can notably be explained by the conclusion of the wholesale distribution rationalisation plan in Italy begun in 2012. "We have reduced the number of our multi-brand customers by 40%," he pointed out. Added to this are Tod's store openings, fifteen or so on average a year.

Emilio Macellari also proved to be reassuring regarding the current situation in Hong Kong, a market that represents 10% of the group's total turnover. "We are not worried. Of course we have seen a negative impact due to the disturbances in Hong Kong, but we are convinced that we will record better performances in the second quarter than the first one. At the time of the disturbances, our sales otherwise increased in Greater China," he indicated.

Among the important projects announced for the Italian group, the purchase of the Roger Vivier label, which Tod’s produces and distributes under license since 2011. The French luxury footwear brand belongs to a privately held company owned by the Della Valle family, and the license agreement with the group (led by Diego Della Valle) expires at the end of 2016.

Tod's Group pays 12% in royalties for Roger Vivier wholesale sales. The brand achieved a turnover of 113.7 million euros in 2013 for a total of 967.5 million and 59.8 million in the first semester of 2014. "Roger Vivier is the group's most profitable brand and we are currently evaluating the possibility of purchasing it as it would be in the group's interest to be able to include it in its portfolio. Discussions should begin in January 2015," explained Emilio Macellari, who rules out that the group, which owns the brands Tod’s, Hogan and Fay, could lose this business.

The group also has some grand ambitions for Hogan. The luxury sneakers brand is Tod's' second biggest money-maker but it is still very focused on the domestic market and has recently seen its sales decline. Turnover dropped 6.1% in the first quarter of 2014, to 104.5 million euros for a total of 477.7 million.

"This brand has not shown its full worth, but it has great potential. It speaks to a much wider market than that of Tod’s and Roger Vivier. Given the considerable tidying up of Hogan's wholesale distribution, its internationalisation and e-commerce, the brand can only move forward. If we manage to achieve the same success with Tod’s, Hogan could reach a turnover of 700-800 million euros within ten years compared to nearly 200 million today," concluded the CFO.

However, a split of Hogan from the Tod's group is currently hardly a topic of discussion. Simply a possibility recently brought up by Diego Della Valle in the the long-term.