Italian designer label Tod's is edging away from its comfortable driving shoes, ballerina flats and platform sandals in an attempt to diversify its business and revive flagging sales. The company hired former Gucci designer Alessandra Facchinetti last year to create a limited collection of clothes and accessories, and just last June appointed a new creative chief, Andrea Incontri, for its menswear line. The strategy is to find new areas of growth after focusing too long on its well-known footwear - and on Thursday the company will offer a look at whether it's starting to work when it releases six-month financial results. "We are trying to send the message that Tod's is not any longer simply a great producer of high-quality shoes, but also that it is more and more becoming a 'maison'," Chief Financial officer Emilio Macellari told Reuters. For luxury goods companies, handbags, wallets and other accessories are easier to sell because they don't require a particular fit. A clothes line helps drive those accessory sales by giving the label - and the shop window - the allure of a collection and ensuring magazine spreads. Lately a slowdown in China, once the sector's growth engine, has hit profits across the luxury goods business. But Tod's high reliance on lower-margin shoes is widely seen as being to blame for sharper falls in sales and profits than its peers have seen. Footwear, such as its driving shoe which retails at $400-$920, makes up 75 percent of total sales at Tod's Group, of which the Tod's label represents 60 percent of the business. Accessories - which can add around 10 percentage points more to a company's gross margin than footwear or clothing - make up around 16 percent. That compares to more than 30 percent and 60 percent at Salvatore Ferragamo and Prada. Analysts say that narrow definition contributed to a slump in same-store sales growth, which slowed to 2.3 percent last year from 7.2 percent the year earlier, and a 6.7 percent fall in sales in the first five months of this year. That in turn has hit the company's bottom line: Net profit dropped to 134 million euros ($179.5 million) last year from 145.5 million euros in 2012, compared with a jump at Salvatore Ferragamo and incremental annual rises at Prada and Gucci. Tod's share price has led a fall in Italian luxury goods stocks over the past year, down 35 percent while Ferragamo's stock lost 24 percent and Prada's 26 percent. Armand Hadida, founder of French shop chain L'Eclaireur which was the first multibrand store to sell Tod's and sister brand Hogan shoes in Paris in the 1980s said Tod's had not offered as many new products as rival brands in recent years. "There is a lack of innovation at Tod's, a lack of differentiation. Everywhere you find the same image, the same presentation in the boutiques. It is not logical in the world in which we live. Consumers need new experiences. Brands need to constantly surprise them," said Hadida. Its struggle to convince people to buy a wider range of its products suggests Tod's may have fallen victim to the success of its signature item. "Tod's makes driving shoes. If you've been telling people you make great loafers for decades, it's very hard to change their minds," said Mary-Ellen Field, an intellectual property management and licensing expert, and director at Vintage Asset Management in London. LONG ROAD AHEAD Tod's – which is the key label in a stable of brands that also include Hogan, Fay and Roger Vivier – has been making accessories since the 1990s. But an early buzz around its best-selling "D-Bag" - said to have been named after brand fan Princess Diana - has not been replicated. Accessories sales have reached no higher than 18 percent of total sales over the past five years. Facchinetti's "D-Cube" leather tote, introduced last year, was an angular take on the D-Bag that hoped to update the model and bring it new attention. Her ready-to-wear line, celebrating the brand's roots with leather skirts and structured vests, has received good write-ups by fashion critics after the last two shows at Milan fashion week. But Tod's doesn't specify how much of each brand's sales come from which products, so it's difficult to gauge how the bag is faring. And the new clothes are only sold in 15 of its more than 220 shops, meaning it's so far too small a business to make a difference in Tod's overall performance. Other brands' turnaround stories show how long the road to becoming a fashion phenomenon can be. Britain's Burberry has taken ten years to transform from the maker of raincoats with chequered lining - that became brand-damagingly ubiquitous - to edgy fashion house, thanks in large part to 42 year-old creative director Christopher Bailey, who joined more than a decade ago and was appointed chief executive last year. Elsewhere, celebrated designer Tom Ford and businessman Domenico De Sole also took several years to transform Gucci from a tired logo-ed shoe and handbag company into a profitable fashion powerhouse after taking the reins in 1994. Tod's group itself houses a successfully revived brand. In the mid-1990s, Chief Executive Diego Della Valle bought Roger Vivier, long dormant since its heyday under Christian Dior's star shoemaker in the 1950s, and relaunched it in 2003. Now the brand is outperforming: sales of pumps and court shoes with Vivier's signature square buckle rose 20 percent in the first quarter of this year versus a 0.8 percent rise for Tod's. But the same buzz hasn't happened at Tod's, consumers say. Clementina Previ, 53, from Lodi in northern Italy, said the brand did not offer exciting new collections in the same way as peers. "I was hoping for something more bold, and the bags were much less captivating than I had hoped," she said as she window-shopped on the cobbled streets of Milan. INNOVATION Macellari, the chief financial officer, says the company doesn't expect the new ranges to restore luster to the brand right away. "The real work for us is to try and create demand," he said in the interview. "This is something we won't achieve in two seasons, we will need longer, but this is the right path." The company is no stranger to innovation: In its early years, the bobble-bottomed "Gommino" loafer was originally designed to give ladies an elegant alternative to the discomfort of driving in high heels. Tod's was one of Italian luxury's earlier firms to list on the stock market - after Gucci and Bulgari, but a decade ahead of Ferragamo and Prada. Della Valle keeps a high profile on the European business scene, with a seat on the board of LVMH, and even does some of the Tod's group's e-commerce himself, selling the brands through his online store theluxer.com. As well as hiring designers, Tod's has tried more recently to push new and different products. This year, it teamed up with Japanese design studio Nendo to create the "Envelope Boat Shoe", a rubber-soled slip-on costing $565. "We would like to think that one day Tod's won't come second to brands like Dior or Chanel or those kind of brands, in the sense that it can have the same credibility. In terms of quality we are absolutely comparable," Macellari said. http://english.ahram.org.eg/News/108126.aspx
