Unlike its peers which have done increasingly well in the last year, Tod’s S.p.A. Has been faltering, but that didn’t stop LVMH, the ultimate firm in the luxury market, from raising its stake in the leather-goods maker.
LVMH raised its stake in the group to 10% from 3.2% for €74.5 million ($89.9 million). The move is expected to help shore up Tod’s, which has been pursuing a makeover of its own to bring in younger clientele.
“This may represent an excellent reason to consider further opportunities to be taken in the future ahead,” said Tod’s CEO, Diego Della Valle, in a press release. That led Jefferies analyst Flavio Cereda-Parini to say in a research note that speculation could emerge over whether LVMH will further increase its position.
Tod’s stock was up 11.3% at €39.28, while LVMH was down 0.6% at €628.30 mid-afternoon European time.
Tod’s, which is known for its classic loafers, also owns a stable of three other luxury brands including Roger Vivier, Hogan, and Fay. But the company is dwarfed by LVMH—owner of brands including Moët & Chandon Champagne, Louis Vuitton, and Christian Dior—which has a reputation for buying up fashion firms.
The Tod’s Group launched a new strategy in 2017 to lure younger customers to its brands and revamp its image. Earlier this month, the group brought on Italian influencer Chiara Ferragni to join the board and leverage her “knowledge of the world of young people.”
Tod’s itself has performed worse than many rivals during the COVID-19 pandemic, but sales had been steadily declining even before that, with revenue falling five years in a row.
Elsewhere in the footwear industry, strong sales and the prospect of future earnings drove a flurry of purchases this year, creating a flock of new billionaires.
Exor—the holding company owned by the Italian business mogul Agnelli family—bought a 24% stake in Christian Louboutin for $1.2 billion in March, while Birkenstock was acquired by L Catterton for an eye-watering $4 billion in February.
Cult British footwear firm Dr. Martens floated stock on the London Stock Exchange in January giving it a valuation of $3.7 billion.
Luxury goods in general have had a good period during the pandemic, with LVMH last week revealing a surge in revenue in the first quarter, surpassing pre-pandemic numbers backed by strong demand in Asia and the U.S. Sales in Europe were still down owing to the lack of tourist footfall and continued lockdowns.