Tod's Q1 Revenues Fall but Its Own Retail Channel Rebounds

MILAN, Italy — Tod's could struggle to meet market expectations on 2019 results after reporting a 4.3 percent fall in first-quarter revenue on Thursday, a top executive at the Italian fashion group said.

"We consider current consensus a bit challenging in terms of revenues and profitability," Chief Financial Officer Emilio Macellari told an analyst call, citing the weak performance of both wholesale and same-store retail sales in the first part of the year.

The shoes and leather goods company, known for its Gommino loafers, has repeatedly fallen short of market expectations in recent years and has struggled to rejuvenate its brands.

First-quarter sales at Tod's fell 4.3 percent to €216 million ($243 million), slightly below an average analyst forecast of €221 million in a Reuters survey.

Excluding currency variations, sales were down 5.7 percent. Closely-watched same-store sales fell 2.5 percent in the quarter and Macellari said the trend had been similar in April and May.

Retail sales improved 9 percent net of currency moves, boosted by Tod's recent acquisition of e-commerce business Italiantouch.

But wholesale revenue dropped around 22 percent year-on-year in the period, in part due to the loss of Italiantouch as a client.

Tod's, however, said the growth in sales through its own store network was an affirmation of its strategy to focus on digital and more frequent collections and collaborations.

"We think we have the right strategy and we need to speed up the execution to achieve the expected results," Chairman and Chief Executive Diego Della Valle said.

By Claudia Cristoferi: editors: Mark Bendeich and Alexandra Hudson.