Freed from public markets, Tod’s targets China for growth

Facing a cooling global luxury market, Milan-based Tod’s Group has successfully transitioned to private ownership after 24 years on the Milan Stock Exchange. Earlier this month, L Catterton — a private equity firm established by US fund Catterton and Groupe Arnault, the owner of LVMH — successfully acquired enough shares to privatize Tod’s Group, valuing the company at just over €1.4 billion ($1.5 billion). Aligning with a broader industry trend in which luxury brands seek greater control over strategic decisions, the privatization enables the owner of Tod’s and Roger Vivier to intensify its focus on key markets like China, where it reported a 24.2% increase in revenue for FY 2023. The shift to privatization gives Tod’s Group greater flexibility to navigate an increasingly complicated global luxury landscape, particularly in China, which has become increasingly important for its flagship brand’s revenue growth. Greater China, home to 124 directly operated Tod’s boutiques, made up 31.7% of the brand’s total sales in 2023, compared to 7.5% from the Americas. Amidst this strategic overhaul, Tod’s has leveraged high-profile endorsements in China, like appointing actor Xiao Zhan as a global spokesperson, to significantly amplify its brand presence and appeal. The move means that Tod’s can invest more freely in areas such as craftsmanship, innovation, and bespoke services without the scrutiny of quarterly financial disclosures. Privatization also allows Tod’s to adjust pricing, tighten control over wholesale channels, and implement tailored global pricing strategies more effectively, aligning with the preferences of Chinese luxury consumers and potentially setting a precedent for other luxury brands contemplating a similar shift from public to private ownership. Additionally, Tod’s is poised to capitalize on its “sober elegance” to expand into the U.S. market, where there is a growing demand for quiet luxury among affluent consumers over 40. L Catterton’s involvement suggests a strategic refocus on markets like the U.S. and China, aiming to enhance Tod’s market positioning and brand desirability.

Sectors

Insights

Company

Freed from public markets, Tod’s targets China for growth