Tod’s, the renowned Italian brand known for its high-quality shoes and leather goods, experienced a significant setback with an 11 percent drop in its shares on Thursday. The company revealed that its sales were still in decline, and its efforts to reverse the trend were not progressing as swiftly as hoped. This news sent shockwaves through investors, leading to a sharp decrease in the company’s stock price.
The latest figures showed that like-for-like sales remained consistent with the downward trend seen over the past nine months, with a 2.1 percent decrease. This raised concerns about the company’s ability to achieve growth in same store sales for the upcoming quarter. Financial experts at Berenberg cast doubts on Tod’s capacity to stage a comeback given the lack of substantial improvement in sales.
In response to the disappointing results, financial institutions such as Berenberg, Kepler Cheuvreux, UBS, and Mediobanca revised their target prices for Tod’s stock downward. Consequently, the company’s stock dropped by 11.1 percent, hitting a two-year low. Despite speculations about a potential sale, Chairman Diego Della Valle categorically denied any plans to sell the company. With Tod’s primarily being a family-owned business valued at around 1.6 billion euros, the future remains uncertain.
While Chief Financial Officer Emilio Macellari acknowledged the challenges in meeting market expectations for full-year revenues due to limited visibility on the fourth quarter, there were initial projections of around 960 million euros in sales for 2018 which were in doubt following the release of the third quarter results. Tod’s reported sales of 706 million euros for January-September, falling short of the anticipated targets.
Earlier in the year, Tod’s had outlined a new strategy focusing on introducing more collections and classic designs in hopes of achieving positive outcomes by the second half of 2018. However, Macellari conceded that the execution of the turnaround plan was proving to be more time-consuming than initially anticipated. Despite this setback, there were encouraging signs that the new products launched under designer Gherardo Felloni’s guidance were well-received in the market.
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