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Italy's Tod's swings to first half operating loss due to COVID crisis

MILAN (Reuters) - Tod's TOD.MI swung to an operating loss in the first half of this year after a 44% sales drop due to the coronavirus crisis, which forced luxury goods brands to temporarily shut stores across the world and idle manufacturing sites.

The fallout of the pandemic will also hit full-year results despite recent signs of recovery in China, the group said on Tuesday, adding however that it was too early to quantify its full impact.

Revenue at the Italian company, famous for its Gommino loafers, fell to 256.9 million euros ($302.9 million) in the six months through June, in line with analysts’ estimates of 255 million euros, according to a Refinitiv consensus.

In the second quarter alone, the worst affected by the crisis, sales fell 56.3%, a steeper decline than that of most luxury rivals.

“The second quarter was worse than the first one, since almost all the stores were closed for most of the period,” Tod’s founder and top shareholder Diego Della Valle said in a statement.

“In the latest weeks, we are registering encouraging signs of recovery,” he said. The group flagged double-digit growth in sales in China but said Europe and the Americas remain weak due to a lack of tourists.

On an adjusted basis, the group posted a loss before interest and taxes (EBIT) of 64.1 million euros compared with an operating profit of 5.8 million a year earlier.

Revenue fell slightly in 2019 in a fourth straight annual decline, but picked up in the last quarter and in early 2020, a positive sign for the group’s re-launch strategy. But the COVID-19 outbreak hit turnaround efforts hard.

Analysts estimate the company’s sales will fall by a quarter this year to around 680 million euros. They are then seen bouncing back to 790 million euros in 2021, a level still below the revenue of 916 million euros reported in 2019.

The company is also expected to report an operating loss both in 2020 and in 2021, according to a consensus estimate published on the group’s website.

Reporting by Claudia Cristoferi; Editing by Silvia Aloisi and Jan Harvey

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