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UPDATE 3-Tod's upbeat about short-term recovery

Published 06/16/2009, 12:13 PM
Updated 06/16/2009, 12:16 PM
TGT
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* Tod's hopes to beat 2009 sales, profit margin forecasts

* Reported sales should grow in 2009, vs flat forecast

* U.S. should contribute to improved trading

(Recasts, adds quotes, details, updates shares)

By Astrid Wendlandt

MONACO, June 16 (Reuters) - Italian fashion house Tod's SpA hopes to beat 2009 sales and profit margin market forecasts, helped in part by improved trading in such regions as the United States, company executives said on Tuesday.

Tod's Chairman and Chief Executive Diego Della Valle said he expected the company to see "small growth this year", if the current stabilisation of the market continued.

By Christmas, consumers should regain some confidence and return to the shops to "get what they want", Della Valle told the Financial Times Luxury Summit.

Tod's, whose ads currently feature Oscar-winning actress Gwyneth Paltrow, is known for its Italian-made loafers and leather bags.

A senior Tod's executive, who declined to be named, told Reuters on the sidelines of the summit that Della Valle's small growth outlook in concrete terms meant a rise in the "low single digits" for retail sales on a reported basis, above analysts' expectations of flat revenues for the year on the same basis.

Asked about Tod's reaching its 2009 profit targets, Della Valle told Reuters: "We are ok with the guidance. It (our performance) could be better (than the target)."

Analysts are expecting the company's margin on earnings before interest, tax, depreciation and amortisation (EBITDA) to drop by some 100 basis points against 2008.

GROWTH INTO 2010

After being hit by a sharp fall in luxury consumer spending, as many other upmarket brands, Della Valle said he expected the small growth trend would continue in 2010.

"I have the impression this year we have seen the stabilisation of this growth trend, although it is small, it is still a growth trend ... and it will continue in 2010," Della Valle said.

The Tod's CEO said he was starting to become jaded about the globalisation of luxury brands, which has made many shops resemble each other. He said that as a result, Tod's was going to revamp some of its store to give them a warmer, more local look and feel.

"You see the same shop windows all around the world, it is awful... So boring," he said. "It (the shop) needs to make you feel at home... more familiar... not like an airport shop."

He said the company would begin by re-doing its shops in Los Angeles.

Tod's revenues rose 5.4 percent to 201 million euros ($277.9 million) in the quarter to March 31.

Shares ended the day down 1 percent at 39.5 euros. ($1=0.7232 euros) (Additional reporting by Marie-Louise Gumuchian in Milan; editing by Karen Foster)

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