China is proving to be the ‘Achilles’ heel’ of part of the luxury universe. After Burberry which yesterday released its fourth quarter results, also driven by the Chinese performance, anticipated by the French giants Kering And Lvmh also involved in a downsizing of the Dragon’s exploits, now it’s the turn of the Group Tod’s. The Marche group, fresh from the positive conclusion of the takeover bid by L Catterton, published the data relating to the first quarter of 2024. Well, in the first three months of the year, the group’s consolidated turnover recorded a decline of 6.7%, archived at 252.3 million euros. The weakness of the Chinese market is essentially weighing on the accounts: Greater China collapsed by 24% in the first quarter, a trend due to the sharp drop in traffic in stores and weak consumption, as well as a challenging comparison base.
And China’s slowdown has caused China’s star to fade (not to say freeze). Roger Vivier. In 2023 the luxury brand designed by Gherardo Felloni had been one of the main drivers of the group’s excellent end to the year Diego From the Valley. In the first quarter of 2024, however, it was the brand that was most affected by the decline with -23% (-20.7% at constant exchange rates).
The flagship brand was also in decline, seeing sales decline to -6.6% (-3.9% at constant exchange rates). “Tod’s and Roger Vivier were visibly affected by the weakness of the Chinese market,” reads the group’s note. Looking at the other brands, they remain positive Hogan And Fayup 8.2% and 12.7 percent respectively.
Returning to the geographical front, revenues in the European area (excluding Italy) increased by 5.1% at current exchange rates to 60.2 million euros. The Italian market was stable with -0.6% at 59.6 million euros. However, the trend in the Americas stands out positively, where sales increased by 19.8 percent. America itself confirms itself as a key market for the group, although for the moment it weighs ‘only’ 20 million euros, therefore less than 10 percent. According to what was reported in recent days by the agency Reuters, “Under the private equity firm’s guidance, Tod’s will invest in marketing to capitalize on its prestige in understated elegance and boost sales in the United States, a person familiar with the matter said.” As the British agency reports, “Tod’s designer shoes and bags – including the ‘Gommino’ moccasins costing 695 dollars (639 euros at the current exchange rate), with their characteristic rubber soles – have a good following among wealthy consumers from 40 years and above. Higher up the luxury scale, Roger Vivier, the $950 per pair buckle shoe brand based in Paris and acquired by the Della Valles in 2015, is more attractive to Asian big spenders.”
“Tod’s – adds the agency – has long refused to chase younger buyers, a choice which it seemed to want to partially remedy in 2021 when it brought the fashion influencer onto its board of directors Chiara Ferragni. After three years, his position was not renewed.”
On the occasion of the communication of the data, Della Valle, president and CEO of the Group, commented: “With the success of the takeover bid, the Tod’s group is exiting the stock exchange. We decided to make this choice to focus on the potential development of our individual brands, making all the necessary investments in the times we deem most suitable. We have a great growth opportunity and we will try to seize it, operating with a long-term vision. We have also decided to share this strategic decision of ours with two global partners, who have great experience in our sector: L Catterton and Lvmh, with whom we shared our entry into the stock market over twenty years ago, who will certainly be precious companions voyage. I take this opportunity to thank the Italian Stock Exchange and Consob for their availability and collaboration shown to us in these years of joint work”.
China, therefore, currently remains an unknown for the world of luxury, although there has been no shortage of high-end players such as Prada, Moncler or Brunello Cucinelli who have recorded excellent performances here. On the other hand, the comparison with the first quarter of 2023 is particularly challenging because at the time the definitive removal of pandemic limitations had given a non-negligible boost to the country’s consumption. To date, however, the Asian country is facing unstable economic difficulties, including decelerating growth, a precarious real estate sector, an aging population and high youth unemployment, reports Jing Dailywhich however reports the results of a recent survey of luxury consumers by the Hurun Research Institute, according to which the Chinese luxury market is however showing signs of resilience, reaching 1.66 trillion RMB (210 billion euros) in 2023, growing by 3% compared to 2022.
