Tod’s: an Italian Success in a Tough Economy

Boy, The New York Times is really focusing on Italian manufacturing lately. Here’s a story on one of my favorite brands — Tod’s. It’s titled “A Shoemaker That Walks But Never Runs” and features an interview with Diego Della Valle, the chairman of Tod’s. (By the way, the company’s web site has a dramatic video of thirteen ballet dancers from Milan’s La Scala Ballet company interspersed with close-up shots of craftsmen hand-sewing Tod’s shoes.)

To his credit, Della Valle has maintained his production in Italy despite the fact that he could reduce his costs in half by making everything in China. I’ve owned a couple of pairs of Tod’s for close to 20 years, so I can attest to the fact that they’re made well, super comfortable, and timeless.

An excerpt from the article brings some much-needed good news from that luxury sector:

For true luxury brands, lowering prices by outsourcing is not something they could really ever consider as a strategy for growth,” said Davide Vimercati, the chief analyst for luxury goods at UniCredit in Milan. On the other hand, he said, Tod’s is “certainly giving up some profitability because they don’t spend less on manufacturing.

Even if outsourcing shoes and handbags could plump the bottom line, the strategy of Tod’s has paid off — and seems likely to keep doing so as long as it stays a premium brand with universal appeal. It was one of the few luxury companies worldwide to increase sales and profits through the financial crisis: profit grew from 77 million euros in 2007 to 83 million in 2008 and 86 million last year.

Analyst Davide Vimercati adds that “Tod’s is proof that if you manage your brand consistently and you build brand equity over the years, you reach a stage where demand remains strong, even in tough times.” Amen to that.

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