LVMH-Backed Firm Bets on Quiet Luxury, Tod’s

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Italian luxury shoemaker Tod’s is poised for a transformation following an investment deal with L Catterton, a firm backed by luxury giant LVMH. With a stake valued at 510 million euros ($545 million), L Catterton aims to rejuvenate Tod’s brand appeal, particularly targeting affluent consumers in the United States.

Listed in Milan but controlled by the Della Valle family, Tod’s profitability has trailed behind its competitors in recent years. Despite its reputation for quality craftsmanship, Tod’s operating profit margin lags significantly behind industry leaders like Prada and Brunello Cucinelli, partly due to higher internal production costs.

The acquisition by L Catterton, offering 43 euros per share, signals a strategic move to revitalise Tod’s brand image and expand its presence in the U.S. market. Known for its iconic shoes and handbags, including the popular Gommino loafers, Tod’s appeals to discerning consumers aged 40 and above.

While Tod’s has historically focused on older demographics, there is potential for growth in digital sales and expansion into new product categories. Efforts to broaden the brand’s appeal, such as the appointment of fashion influencer Chiara Ferragni to its board, have shown promise but require further development.

To compete effectively in the luxury market, Tod’s must accelerate the rollout of new collections, invest in marketing, and enhance its retail strategy. The investment plans by L Catterton, with a typical five-year horizon, aim to drive long-term growth away from the constraints of short-term stock market pressures.

While challenges persist, including a slowdown in luxury demand post-pandemic and concerns about the Chinese market, Tod’s remains committed to its heritage of quality and craftsmanship. With support from L Catterton and a focus on strategic expansion, Tod’s looks towards a revitalised future in the competitive world of luxury fashion.