The Board of Directors of Tod’s S.p.A., the Italian company listed on the Milan Stock Exchange and holding of the luxury goods group of the same name operating in luxury and quality shoes, accessories and apparel with the Tod’s, Hogan, Roger Vivier and Fay brands, approved the group’s report for the first half of 2020 ended on 30th June, 2020.
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In the first half of 2020, consolidated sales were US$302 million, down 43.5% from H1 2019; the sharp decline in revenues reflects the effects of the restrictions adopted to deal with the spread of the COVID-19 pandemic, such as the closure of shops and severe restrictions on the movement of people, with an exceptionally negative impact on tourist flows. The impacts were much more evident in the second quarter of 2020, when the lockdown, which in the first quarter had mainly characterized the Greater China area, was practically extended worldwide.
In the second quarter of 2020, sales totalled US$122 million, down 56.3% from Q2 2019, mainly due to the long closure period of most of the stores.
In the current year, the impact of currency fluctuations is not meaningful; at constant exchange rates, meaning by using the average exchange rates of the first six months of 2019, including the related effects of hedging contracts, sales would have been US$301 million, down 43.6% from the first half of 2019.
After a positive start in the first weeks of the year, the group’s results were visibly influenced by the outbreak of the Covid-19 pandemic, which led to the progressive closure of the stores in all geographic areas and the interruption of production activities.
In particular, at the end of January the first stores were closed in China and the tourist flows from that area were stopped, with a negative impact on the store traffic worldwide. In March, the store closures were extended to Europe and, subsequently, to America.
The shops were then progressively reopened, starting from China in the second half of March. In Germany, the stores were reopened at the end of April, in France and Italy in mid-May, in UK and the United States in mid-June, although in this region the crisis due to the pandemic was further worsened by internal social conflicts.
The worst moment of the pandemic therefore happened in the second quarter of the year; in fact, for the entire month of April and the first half of May, 53% of the stores were closed. As of 30th June, 2020, 78% of shops was open regularly, 16% was open with restricted opening hours and 6% was still closed.
As of 31st August, 2020, 75% of the shops were open regularly, 24% were open with restricted opening hours and 1% were still closed.
The restart of activities was gradual, and of different intensity, in the various areas of the world. The most reactive market was Mainland China, where revenues recorded double-digit growth in the second quarter, progressively accelerating. On the contrary, Hong Kong and Macao remained much weaker. There were good results also in Korea and Japan. Europe and the United States were still very weak, due to the strong impact of the absence of tourists.
The e-commerce channel has always remained operational, even if, during the lockdown, it was partially affected by some restrictions in logistics activities, and continues to grow significantly. Production activities were interrupted on 12th March, 2020 and have been gradually restarted from 4th May, 2020, in compliance with all the safety and health procedures envisaged for the protection of employees.
The impact of the pandemic was also particularly visible on profitability, despite the careful and prudent cost review policy, carried out in a timely and accurate manner, with the aim of containing non-strategic and not urgent costs, therefore without affecting the quality of products and the medium-term prospects of the business.
As of 30th June, 2020 the group’s distribution network was composed by 292 DOS and 112 franchised stores, compared to 288 DOS and 114 franchised stores as of 30th June, 2019.
In the first half of 2020, EBITDA adjusted was equal to US$14.4 million, or 4.8% of sales, which compares to US$94.6 million in the first half of 2019. Despite a small decrease of the industrial margin, mainly due to greater discount activities on the Spring Summer collections, EBITDA adjusted was hit by the higher incidence on sales of operating costs, despite the careful and prudent review of unnecessary costs.
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In the first half of 2020, EBIT adjusted was negative and equal to US$75.4 million, compared to a positive result of US$6.8 million in the first half of 2019. The absolute value of ordinary depreciation, amortisation and provisions is broadly stable, net of the Depreciation for right of use assets.