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MILAN - An investment firm backed by LVMH is betting demand from wealthy Americans for quiet luxury will ensure its 510 million euro stake in Italian shoemaker Tod's yields the double-digit returns private equity typically seeks.
Under the stewardship of private equity, Tod's will invest in marketing to capitalise on its sober elegance cachet and grow U.S. sales, a person close to the matter said But the group's smaller brands, such as Fay, which makes jackets inspired by U.S. workwear, and Hogan, which pioneered the luxury sneaker trend but failed to profit from its boom over the last decade, need refreshing.
Back in 2018, Tod's septuagenarian founder Diego Della Valle told the Financial Times that"millennials are not for everyone" - a demographic that includes people up to their early 40s. To compete with the best in class, Tod's must accelerate its rollout of new collections and invest heavily in its brands' image, the source added.
Any relaunch also requires a more ambitious retail strategy, a luxury industry executive said, with openings and a new store concept. At the end of last year, Tod's had 19 directly-owned shops in the States, the same number as in France.Demand in China is a particular cause for concern as Tod's is strongly focused on the Asian market. The Greater China region, where Tod's runs directly 124 boutiques, accounted for 31.7% of total sales in 2023, against the Americas' 7.5%.
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