Tod's shares Rise after Operating Profit Beat

FILE PHOTO: Models present creations from the Tod's Fall/Winter 2023/2024 collection during Fashion Week in Milan, Italy, February 24, 2023. REUTERS/Alessandro Garofalo/File Photo
FILE PHOTO: Models present creations from the Tod's Fall/Winter 2023/2024 collection during Fashion Week in Milan, Italy, February 24, 2023. REUTERS/Alessandro Garofalo/File Photo
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Tod's shares Rise after Operating Profit Beat

FILE PHOTO: Models present creations from the Tod's Fall/Winter 2023/2024 collection during Fashion Week in Milan, Italy, February 24, 2023. REUTERS/Alessandro Garofalo/File Photo
FILE PHOTO: Models present creations from the Tod's Fall/Winter 2023/2024 collection during Fashion Week in Milan, Italy, February 24, 2023. REUTERS/Alessandro Garofalo/File Photo

Shares in Tod's rose as much as 5% on Thursday after the Italian luxury group's first half operating profit more than tripled compared to the same period of last year, beating analysts expectations.

Earnings before interest and taxes (EBIT) reached 60 million euros ($64.3 million) in the January-June period, led by growth in sales and a more favorable product mix, Reuters quoted the group as saying in a statement.

Given the better-than-expected results, the group has scope to beat the current analysts' consensus on full year sales and operating profit, Chief Financial Officer Emilio Macellari said in a post results conference call on Wednesday evening.

Analysts expected sales to reach 1.147 billion euros and EBIT to total 85 million euros in 2023, according to a consensus published by the company on its website.

However, Macellari cautioned that profit growth in the second half will be hit by higher marketing expenses.

Sales grew 23% in the first six months of the year, driven by a strong performance in Greater China, as already indicated by preliminary data published in July.

Growth in sales returned to more normal levels in July and August compared to the aggressive rate seen in the previous months, Macellari added.

This applied both to China and Europe. In the latter, tourist demand was still strong, but the domestic consumption was weaker, he added.

The group is also confident it will find a substitute for its creative director Walter Chiapponi, who will leave the company after this month's Milan fashion show, in time for its next collection, Macellari said.

He also pointed out that the new creative director is not expected to perform a "revolution" but rather an "evolution" of what Chiapponi started, supported by the internal team.



Analysts: Shein's Planned Hong Kong Listing to Benefit from Wider Capital Pool

FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo
FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo
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Analysts: Shein's Planned Hong Kong Listing to Benefit from Wider Capital Pool

FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo
FILE PHOTO: A company logo for fashion brand Shein is seen on a rail of clothing on its Christmas bus as part of a nationwide promotional tour in Liverpool, Britain, December 14, 2024. REUTERS/Phil Noble/File Photo

Shein's planned listing in Hong Kong will help the online fast-fashion retailer avoid sharp investor scrutiny of its supply chains while tapping into capital from the mainland and emerging market investors, analysts said.

The Singapore-headquartered company has turned its public market debut ambitions to Hong Kong after failing to win Chinese securities regulatory approval to proceed with a London initial public offering, Reuters reported last month, citing sources.

While a listing, if successful, would be a big boost for Hong Kong, the move would cast a cloud over the company's efforts in recent years to gain legitimacy as a global, rather than a Chinese company. Shein, which sells products including $5 bike shorts and $18 sundresses, has faced political and environmental group pressure in the UK over its cotton sourcing and supply chain practices.

It has also faced allegations that its clothes contain cotton from China's Xinjiang region, where the US and NGOs have accused the Chinese government of human rights abuses and forced labor. Beijing denies any abuses.

The company, which moved its headquarters from China to Singapore in 2022, has previously said it has a zero-tolerance policy for forced labor and requires its contract manufacturers to only source cotton from approved regions.

"If it is the only option now open to them, the Hong Kong market does make sense as a place where you could list a global business with a mainland supply chain," said Eliot Fisk, a Hong Kong capital markets consultant and former JPMorgan banker.

Shein did not respond to a Reuters request for comment. Before its attempt to list in London, Shein had pursued a listing in New York. The China-founded company had also faced regulatory hurdles and pushback from US lawmakers in its attempt to list in the United States.

"Listing in Hong Kong would also likely dodge the protests and political pushback it might face in the UK," said Craig Coben, former Bank of America co-head of capital markets in Hong Kong.

While it is not known whether Shein plans to seek any waivers for a potential Hong Kong listing, several waivers, including disclosure-related waivers, can be sought by large IPO hopefuls in the Asian financial hub, according to capital market lawyers.

A Hong Kong listing would also allow Shein to eventually be added to the city's Stock Connect scheme which gives easier access for mainland and Hong Kong-based investors to buy shares on each country's respective markets more easily.

Shein would easily meet the market capitalization and other criteria for inclusion in the connect scheme and for attracting mainland investment, said Hong Kong-based advisory firm Emmer Capital Partners CEO Manishi Raychaudhuri.

There was a 255% year-on-year increase in average daily turnover in the first three months of the year in Southbound trading, mainland investors buying and selling Hong Kong stocks, the Hong Kong Exchange said in its first quarter results.

"Hong Kong would have a dominant presence of Asia and emerging market-focused investors. London on the other hand, would have a significant presence of global and developed market investors," Raychaudhuri said.

"The supply chain issues would have been a more important consideration for the latter set of investors."