Tod 'S Group 2019 First Half Financial Report: Net Loss 6 Million Euro

Italy luxury group Tod 's SpA (hereinafter referred to as Tod' s) announced the key financial data in the first half of fiscal year 2019, to increase its brand awareness, the group increased investment, resulting in a net loss of 6 million euros in the first half.

The core financial data of Tod 's group, as of the 2019 half year of June 30, 2019, are as follows:

Sales fell 4.7% to 455 million euros compared to the same period last year.

Net loss of 6 million euros, net profit of 33 million 200 thousand euros in the same period last year.

According to the new IFRS 16 accounting standard, EBITDA (interest profit before depreciation and amortization) is 80 million 400 thousand euros, and the profit margin before interest tax depreciation and amortization is 17.7%.

After the announcement of the earnings report, Tod 's shares fell. By the end of August 8th, shares fell 2% to 45.02 euros per share.

Last week, the shares of Tod 's group continued to rise, reaching a record high of 48.22 euros in August 1st, the highest since November 2018.

Group Chairman Diego Della Valle said: "in order to enhance its brand awareness, the group made a higher investment than expected, which has a temporary impact on the performance in the first half of the year. The real challenge for the group is to enhance its attractiveness to young customers in the new market. These customers are the main consumers of luxury brands. To this end, we need to increase investment to make our brand more attractive and well-known. The Tod 's Factory business model is moving in the right direction. We firmly believe that it is time to invest in order to get the ideal sales volume. The sacrifice of any short-term profit margin will be beneficial to the medium term profitability and capitalization of the group and its brands. Our family is confident of the effectiveness of the group strategy and will continue to repurchase the stock. "

Since the end of 2017, the Tod 's group has begun to adjust its production mode and launch the Tod' s Factory business model. The project is intended to focus on classic products. Meanwhile, a series of products will be released in one year. Besides the regular series of two seasons in a year, there will be capsule series and limited series, and even a new product will be launched every two months.

Last December, the Della Valle family announced a 5% share repurchase program. In March this year, the group's chief financial officer, Emilio Macellari, revealed that by the end of October this year, Diego Della Valle and its family will have 68% of the total share capital of the group.

In a telephone conference with analysts, Emilio Macellari said the Group expects the first half of the year to continue to the second half of the year. The Group expects annual sales to be 9.35~9.37 billion euros, with a profit margin of 10.7% before interest tax depreciation and amortization. In May this year, he said that 2019 annual performance to meet market expectations could be challenging. Emilio Macellari also revealed that the Della Valle family has not yet considered privatization of the group.

When asked if shareholders were confident in the company's future, CEO Umberto Macchi di Cellere said: "the Della Valle family is sure that it will not be a losing battle."

Tod 's group's 2019 brand performance in the first half of fiscal year is as follows:

Core brand Tod 's sales fell 9.7% to 231 million euros, down 11% from the fixed exchange rate, but retail channel sales performed well.

Roger Vivier sales increased by 11.6% to 101 million euros, up 10.1% from the constant exchange rate, with positive results in all regions except the United States.

Hogan sales fell 4.5% to 100 million euros, down 4.7% from the fixed exchange rate, mainly due to the weak market in Italy, but overseas markets performed well, especially in the Chinese market, with two digit growth.

Fay sales fell 12.8% to 21 million 500 thousand euros compared to the same period last year, entirely due to the weakness of wholesale channels.

Tod 's group 2019 in the first half of fiscal year, each category shows as follows:

Footwear sales fell 4.2% to 368 million euros, down 5.1% from the fixed exchange rate, mainly due to wholesale channels.

Sales of leather goods and accessories fell 4.9% to 62 million 300 thousand euros, down 6.6% from the fixed exchange rate, but the second quarter performance has improved.

Garment sales fell 11.7% to 24 million 100 thousand euros compared with the same period last year, reflecting the sales trend of Fay brand.

Tod 's group's 2019 half year financial markets are as follows:

Italy's domestic sales fell 9.6% to 125 million euros compared with the same period last year, and the positive performance of retail channels failed to make up for the weakness of wholesale channels.

Sales in other parts of Europe dropped 7.7% to 115 million euros compared to the same period last year.

Sales in the Americas fell 7% to 34 million euros compared to the same period last year, mainly because of a sharp slowdown in demand in the past few months, not just tourists, even for local consumers.

Sales in the Greater China region increased by 2.3% to 112 million euros compared with the same period last year. The sales performance of China's inland market was excellent, accounting for more than 60% of the total market share, but the performance in Hongkong was poor.

Tod 's group's 2019 half year financial year's performance is as follows:

Sales of retail outlets (Direct stores + electric business) increased by 6.5% to 319 million euros, or about 70% of total sales. Among them, the electricity supplier channel (including the Italy e-commerce brand Italiantouch acquired in 2018) has achieved stable two digit growth, while same store sales decreased by 4.5% compared with the fixed exchange rate.

The third party channel (franchised store + independent retailer) sales fell 23.6% to 135 million euros compared with the same period last year. In addition to being affected by the acquisition of Italy's e-commerce brand Italiantouch (no longer included in wholesale sales) and Australian franchised stores, the channel itself is also weaker in Italy and Europe.

As of June 30th, the global distribution network of Tod 's group includes 288 direct outlets and 114 franchised stores.