Tod’s Group 2023 Profits More Than Doubled; Response About Tender Offer Expected at End of March

MILAN — With a strong set of results that saw profits more than double and sales grow almost 12 percent last year, Tod’s Group chairman and chief executive officer Diego Della Valle on Tuesday touted “the soundness of the strategy” the luxury company is following to make its products “increasingly special, of great quality and very desirable.

“The next few years will see us committed to the consolidation of individual brands, and this is also why we felt strategically important to share this project with the L Catterton investment firm by leaving the stock exchange, an institution with which we have always had excellent relations,” Della Valle added.

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Questions about the delisting during a call with analysts on Tuesday were swiftly thwarted as chief financial officer Emilio Macellari could not participate and Cinzia Oglio, Tod’s Group investor relations manager, said that “due to the tender offer [she was] not allowed to make too many comments.”

Oglio did respond to one analyst who remarked that, since the announcement on Feb. 11 of L Catterton’s launch of a voluntary tender offer aimed at acquiring 36 percent of Tod’s to delist the Italian luxury group, there had been no further developments or documents to be seen. Oglio said that, in accordance with “the time frame by Italian law, L Catterton has supplied the draft and it has to be approved by [the Bourse watchdog] Consob.” She explained that the exact timing was not known but that a response by Consob was expected by the end of the month.

As reported, the Italian luxury group disclosed it had entered an agreement with a newly incorporated Milan-based vehicle called Crown Bidco Srl. This is owned by LC10 International AIV LP, a private fund affiliated with L Catterton Management Ltd., backed by LVMH Moët Hennessy Louis Vuitton. As per this agreement, Crown Bidco will launch a voluntary tender offer for a consideration of 43 euros per share for almost 13 million shares, or about 512 million euros, in order to delist Tod’s from the Milan Stock Exchange. The agreement includes the possibility of a merger if the delisting is not achieved.

In the meantime, the group reported a strong performance in the 12 months ended Dec. 31, with net profit of 50 million euros, compared with 23.1 million euros in 2022, on the back of revenues that rose 11.9 percent to 1.12 billion euros. This compared with 1 billion euros in 2022.

At constant exchange rates, sales grew 14 percent.

In the fourth quarter, sales rose 7.5 percent at constant exchange rates, driven by an increase of the retail channel of 11.9 percent.

Operating profit almost doubled to 94.7 million euros compared with 58.2 million euros the previous year.

Earnings before interest, taxes, depreciation and amortization rose to 253.9 million euros, with a margin on sales of 22.5 percent, from 207.2 million euros in 2022.

Diego Della Valle
Diego Della Valle

“I am very pleased with the results released today,” Della Valle said in a statement. “We are very pleased to have achieved our yearly targets, even within a challenging international macroeconomic environment.

“We confirm our great commitment to all issues related to sustainability and to all initiatives aimed at improving the well-being of our employees, while promoting many projects and initiatives useful for improving people’s quality of life. I would like to take this opportunity to congratulate and thank all our collaborators and employees for the excellent results achieved, also thanks to their valuable support and loyalty.”

Asked about current trading, Oglio said January and February were “in line with the industry,” with the former month being “softer,” also given the different timing of Chinese New Year, and the latter “much better, growing globally everywhere with the exception of Greater China, which showed some weakness, and Hong Kong and Macao not so brilliant.”

The Chinese cluster is buying outside China, traveling to Japan, South Korea and Australia, less to Europe, she said.

In January and February, Europe showed a resilience of local and loyal customers, but also of tourists. “The spring 2024 season started with a positive mood in stores,” she said.

However, pointing to “very low visibility” on 2024, she cautioned that “everybody knows the growth rate in the industry in general will be lower this year, around midsingle digit, so improvements on profitability are not granted and flattish profitability will be a good result.” She said the Chinese now “have a different attitude, they prefer travels and experiences, they are not so addicted to luxury shopping, so competition is tougher in China.”

In 2023, sales of the Tod’s brand rose 10.4 percent to 562.9 million euros, and Roger Vivier was up 16.5 percent to 286.7 million euros recording growth while maintaining its exclusive positioning.

The new, graphic take on the Belle Vivier style from the Roger Vivier fall 2024 presentation in Paris.
The new, graphic take on the Belle Vivier style from the Roger Vivier fall 2024 presentation in Paris.

Hogan revenues rose 9.3 percent to 214.2 million euros and Fay climbed 13.2 percent to 60.4 million euros.

Shoes, the group’s core category, reported a 10.4 percent increase to 857.8 million euros.

Sales of leather goods and accessories rose 16.6 percent to 187.3 million euros and apparel was up 16.7 percent to 79.1 million euros.

Asked about production, Oglio said shoes are produced 45 percent in-house, leather goods one third and apparel is entirely outsourced.

By geographies, sales in Italy grew 4.9 percent to 263.9 million euros and revenues in Europe reached 239.6 million euros, up 10.5 percent on 2022.

Revenues in the Americas reached 85 million euros, up 3.5 percent on 2022, with a progressively improving trend in recent months, Oglio said.

Sales in Greater China reached 356.7 million euros, climbing 24.2 percent.

“In line with the trend of the sector, the Chinese market has shown some volatility in results during individual quarters, due to the different basis for comparison in 2022; in the year, revenues from this area recorded solid double-digit growth, also compared to 2021,” Oglio said.

Sales in the rest of the world were up 7.2 percent to 181.5 million euros, driven by “excellent results” in Japan.

The retail channel, which represents about 75 percent of the group’s turnover, recorded solid double-digit growth of 13.2 percent to 841.8 million euros.

Revenues from e-commerce also grew, accounting now for more than 9 percent of sales, said Oglio, Considering also the multibrand platforms, online sales represented around 15 percent of total revenues. “We have invested a lot in digital, and have recently improved the Tod’s and Hogan websites,” she said.

As of Dec. 31, the group had 345 directly operated stores and 99 franchised units, compared to 333 and 89 stores, respectively, at the end of December 2022.

Revenues from the wholesale channel grew 8.1 percent to 284.9 million euros.

In fiscal 2023, fixed asset investments amounted to 55.8 million euros, compared with 45.8 million euros in 2022, mainly channeled into the expansion and renovation of the store network. The rest of the investments were related to the modernization at the industrial and corporate structure levels.

As of Dec. 31, net debt stood at 89.7 million euros, compared with 71.1 million euros at the end of 2022.

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