The Stock Exchange made Tod’s shoes, here’s how and why
Tod's performances are increasingly distant from those of the big fashion and luxury companies. Fabio Pavesi's article for Verità & Affari
That little game couldn't go on indefinitely. For years Diego Della Valle, the ingenious and brilliant owner of Tod's has been telling the market about the glories of his luxury company. But that story no longer coincided with reality for some time. From the peak of 140 euros reached in the summer of 2013, the Tod's stock has never recovered from a long fall backwards.
That was the Zenith of the brilliant stock market venture of the Marche-based company. Then the void. An abyss, which went hand in hand with the slowdown in the profitability of the group that has progressively distanced it from the successes of the great fashion and luxury companies.
The comparison had been merciless for some time now and the value of the title could no longer stand up to comparison with the real giants of luxury. From LVMH itself, to Hermes, to Prada to Hugo Boss just to mention the foreign giants with which analysts compared Tod's performances. But the comparison on profitability saw Tods' loser also against that patrol of domestic securities grouped in the luxury segment.
From Moncler, to Ferragamo to Brunello Cucinelli. After all, it was enough to look at the numbers in the financial statements, which is what counts beyond the rhetorical narratives. Tod's for over a decade no longer marched to the pompous rhythms of its past. And just 2013, the year of the stock market record, is the watershed.
Used to seeing rising rates of profitability with Mol reaching 25% of revenues and operating profit above 20% of turnover, Tod's has since put it in reverse. The Mol on revenues began a sad slowdown, never recovered. Already in 2017 it had fallen to 15% from the record of 25% in 2013. Then even lower. With operational industrial profitability data finished in red in 2020.
A decade of slow erosion, with net profits that from 140 million in 2013 had more than halved in the pre-pandemic year, before ending up with a loss of 70 million in the dramatic 2020.
While Tod's languished, the others kept pace enough to deserve the premium valuations that the stock market recognizes luxuy stocks, by virtue of their high and constant profitability. Brunello Cucinelli, for example, has a Mol value on revenues of 16%; Ferragamo reaches 19%; Moncler exceeds 30%.
Tod's, on the other hand, stops below 7%. Similar photo also on operating income with Cucinelli at 11%; Ferragamo at 13% and Moncler at nearly 30%. Tod's instead had operating profits in 2021 at only 6.8% of revenues. And this is the comparison only with the competitors of Piazza Affari.
The gap gets even deeper with European luxury giants with Hermes over 40% gross profitability and LVMH itself, which will hold a 10% stake in Tod's after the delisting, which has profitability numbers steadily approaching 30% of revenues.
Seen in this way, this is probably the real profound reason for Tod's exit from the list. By now the stock exchange had not recognized Tod's market multiples assigned to luxury securities for years. And so Tod's was no longer as popular as Della Valle thought it deserved. More than the phantom development of the brands, affixed as a justification for the delisting, what counts is the fact that the Stock Exchange had already turned its back on the footwear and clothing company from the Marche region. End of a convenient narrative. The market is interested in numbers and, as you can see, they don't lie.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tods-declino-performance/ on Mon, 15 Aug 2022 13:43:10 +0000.