Diego Della Valle: Tod’s ‘Coherent’ Approach to Growth

Diego Della Valle of Tod’s SpA takes a long-term view in a short-term business.Tod’s chairman and chief executive officer has a...

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Diego Della Valle of Tod’s SpA takes a long-term view in a short-term business.

Tod’s chairman and chief executive officer has a conviction: If he wanted his cashiers to ker-ching faster and louder, he could do so in the blink of an eye. “We could triple our sales by inventing new products, new licenses and new distribution channels,” he said. “The numbers would soar, but that approach wouldn’t be serious or coherent with the group’s growth strategy for the next 10 years.”

Della Valle might prefer a steady-as-she-goes approach, but he’s upping its tempo in the months ahead. Tod’s will continue to expand its collections of small leather goods, leatherwear, jewelry and other products while introducing new categories such as sunglasses. It also is strengthening the management team at its other brands, Hogan and Fay, with the appointments of new brand managers and creative personnel.

But while Tod’s has opened 38 stores in the past 18 months, don’t expect to see any explosive expansion at the company. That’s not the Della Valle way. “The market is replete with products, consumers have everything, so we owe them something special. We must never betray their expectations, which, in our case, means the best leather quality and a modern product that isn’t slave to dates,” he said. “This may require more time, but once the products hit the market, we realize that the consumer respects the fact that we live up to their desires.”

A staunch opponent of the mergers and acquisitions fury that galloped through the fashion business in the late Nineties, Della Valle’s business acumen goes well with the adage, “A journey begins with a single step.” But that’s not to say Tod’s future growth is at stake, as some analysts have suggested considering the brand’s products focus primarily on shoes and bags.

“The litmus test and stock market response of how we’ve prepared for the future will be visible in the second half of 2005,” Della Valle said, speaking primarily for the Tod’s nameplate, which is still the group’s cash cow at 59.5 percent of its sales of $450 million. Heavy investments in its store network contributed to a 28.2 percent drop in net income at Tod’s last year to $31.4 million, or 25.8 million euros, versus $43.8 million, or 35.9 million euros, in 2002.
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