Tod's CEO Diego Della Valle plans for the future
The founder and CEO of Tod's tells FT editor Roula Khalaf at the Business of Luxury Summit that he would only ever consider a sale of the Italian luxury goods maker to LVMH. While preparing for succession, he says business must do much more to support Mario Draghi's reforms and that business people nowadays have to 'do a lot of things for other people'
You can enable subtitles (captions) in the video player
I'm really delighted to have Diego Della Valle at the opening of our luxury summit. Diego, it's good to see you. I think you may be the last person I saw before the pandemic.
That's true. It's true.
How have you been? Have you been well?
I'm in Capri for three days now. Usually, I use this time to do jogging, diet, and think about some interesting project for the future, and perfect it, especially now.
Good. Well, I'm sure we'll get to some of the projects for the future. But let me ask you first about the last year because it has been hard on Tod's, and it's been hard on a lot of companies, of course. Your revenues were down 30 per cent. You're, of course, exposed to Europe. You're also exposed to China, less exposed to the US.
What is the outlook for 2021? What has it been like the last six months?
I think that last year I decided, especially in the first part of the virus, we decide don't make a wrong decision about distribution, products, because everything was completely insecure. Nobody know about nothing. We decided to stop it as it is possible to send the product, to help our shops. We tried to finance the companies. We tried to take back the product.
You know, we want... the idea was to save the moment because everything was completely out of any control. This year is better because we see the light, we hope. And we try to have our precise strategy for the future, for the second part of this year, and for especially the 2022, that is the most important now target for us.
We think that in this year, the second part of, I hope, I think, is a good and positive moment. The life coming back, maybe not 100 per cent but much, much better, of course, than before.
In this year, what do we do? We try to move, change in everything in one precise direction. Before, my idea about two or three years ago, was precise. I tell four years ago... I said with my managers, well, watch, because the web maybe is fantastic, but at the same time it will be dangerous for the luxury company with the luxury time, because the timing in the luxury company is not so fast like they were.
It seems, of course, it was the wrong decision. And now we are.. and now we are in the right way. And we work, and we work and work quickly for arrive to our goals. And what we want to do? We change a little the creativity in our luxury product.
Over the past year, have you... you've had, obviously, to close down a lot of the boutiques. Is everything reopening? And to what extent during that year did your... did you move to online sales?
The last year we tried to do the best as is possible. We don't touch employees because in our group the employees is the centre of our life. We defend the works of our people. We don't close the shops, only a few worldwide.
We tried to cut costs, because in a company like our company, after 10 years it was a very good pit stop, tried to cut costs, change some strategy, some execution in more easy, less expensive. And this is...that's it.
At the same time, we decided, don't do many collections a year. We tried to change the appointment for the two-season collection because I think now in our business, with the web that pushes us, we need to do minimum, a project every two months, one project precise, with strong marketing. This is the good news, the real big news in our business model.
And this year we're having execution about this strategy. And I think now I am sure that is the right way for us. We test every day the new ideas. We need to have an incredible big attention about the web, about - everything is online now. It's our... our first interesting project.
And I understand, personally, if you think that is very important. Maybe you see better than me that in the last three or four years, the luxury changed. The companies are super big. The increase is two... double digit, three double digit. It was completely different than before. Before, the luxury in the success moment grow one or two double digit easy, the life was like life product, super exclusive.
It was another time, you know. Now, everything changed.
Yes. Do you think that things sort of started to change several years ago? Because your sales have been down for several years. There was the pandemic, but even before the pandemic. When you look back over the last few years what do you think you would have done differently? And how do you reverse today the declining sales?
One, the super big market, Asian market, especially China, now is super, super present in the worldwide business. Second, a strong generation of young people that now is not so young is people around 20 to 30 that love to buy products worldwide. And third, the iPhone in the hands of this generation. These three points more or less made the big difference.
And the creativity in the product, especially for the luxury company like us, we was very proud for our icons product that was the same for 50 years. The same... changes sometimes the customers, the new one arrived, their daughter or their son follow the father or the mother, and now this is completely changed.
You think that doesn't work anymore? You have to constant... you have to innovate a lot more?
The formula is 50 and 50. 50 per cent will remain very close to our story, the super quality, the Italian lifestyle, and the evergreen product like a super luxury product. The other 50 per cent is a super quality with a lot of creativity, a cool and fun product, with a new communication for the young generation.
I don't want to lose the big story. We need the big approach with the future. I think this formula for me is the best because it guarantees the long life for the company, it guarantees the story of the products. At the same time you touch the new customers with a big curiosity about creativity, about quality. The good marriage is a 50-50. The 50 is the life, our life. 50 is the future life.
You don't like... you don't like sneakers. But everybody's wearing sneakers. And all other luxury brands now make sneakers. And this has been reinforced in the pandemic. So are we going to have Tod's sneakers?
It is true. My brother want to kill me for this. When I was a student in Bologna University, I was one of the few guys with a blazer, blue pair of jeans, and white sneakers at the time, 40 years ago.
So what happened to you?
I don't believe before the sneakers and luxury was the same thing. Luxury is one thing. Sneaker is another thing. But now, the market shows me that the sneakers is luxury, no luxury. Sneaker is sneakers now. I understand.
You understand. OK. So then...
Now we make 100,000 pairs of sneakers a month.
Does this say that you are too risk-averse?
I am the person that guides the company. There is more or less, between my and the companies that work for us, 10,000 employees. I need to guide with a prudent touch. But at the same time, I have a lot of curiosity.
In our story, we start for many products before there are many others. We started, we invented, some products, because the curiosity supports and push me. I think I am super curious for the product, super prudent for to guide the company.
Let's talk about China because it is obviously becoming a much more important market for luxury. A lot of people say that there was a reliance on the Chinese tourist before, the Chinese tourist coming to shop in Europe. That trend has shifted now.
Do you think that you now need to go to the Chinese market rather than wait for the tourists to come to Europe?
We was born many years ago without the Chinese tourists to Europe. I remember my first trip in China around 15 years ago. Very fascinated. It was one my big friends, Yves Carcelle. He was at the time the CO of Louis Vuitton.
We followed the Chinese market. And the Chinese do it an incredible story, an incredible powerful today in the market, especially in luxury. But I had a lot of fantastic customers in... a charming woman in Paris, a charming woman in London, elegant woman in Berlin, a lot in New York. This is... we have a big market potentially in our hands.
But do you think you need to expand the retail and marketing in China now?
Yes. In our strategy, we don't... we try to remain super exclusive and that's it, yes. But at the same time the managers now work a lot for don't forget our customers in Europe and US.
OK. What else is in the strategy other than being sort of more into sneakers, and perhaps being a bit less risk-averse? What else is in your strategy for the next five years? I remember that a few years ago, you had... you unveiled a turnaround.
And you talked at the time about Tod's Factory. What is Tod's Factory, and is that still going on?
Tod's Factories is like a laboratory with ideas, especially new ideas. And it's a part of my group, super small. Less people, very quickly. In this part of the company I try to test what I like. Sometimes, the thing... it's 100 per cent laboratory about new ideas, about new picture, about a new communication. We speak about pop-up. It's a service for my group.
The idea is every people is free to work and try to do what they want. It's our partnership with the Saint Martins School, was a Tod's Factory idea at the time. The idea was give a free message to the student, this is the two or three iconics product in Tod's, you translate like you want.
And it's still operational, Tod's Factory? The system is still working?
There is every season two or three different things, minimum. Sometimes it's collaboration. Sometimes, we make a small line we want to sell in two months. But it's mainly small ideas, but we want to test for what is possible use for us in the big company.
And is there something you can... an idea that you can share with us, give us an example, a recent example?
I think the collaboration with Alber Elbaz my big friend... unfortunately, he passed away. Super big man, super good designer. We do together one capsule. And now we have a Japanese guy that prepares for the next month another one. And we have one or two ideas about pop-up for summertime.
And the last one very that I loved was the partnership with the Saint Martins School. And we have... we improve month by month. Maybe one day we needed to have a few designers that speak about the new style in the shops, for example, because I think that the shops, like the traditional shops, more or less, is finished.
Now we need to have another type of shops with the super movement, like, more pop-up than shop.
So you're thinking more of the shop as an experience.
Yeah. It's true. If you want people in the shop you need to give an experience. The pop-up is that, you know. I think the future is a mix between shops, pop-up, and e-commerce. This is the new omni-channel in the future, is that.
Let's imagine the Tod's shop. What would happen in a Tod's shop, if I walked into a Tod's shop of the future?
Maybe for some small market with three or four young designers, we want to organise every month, we want to present one young designer. And this is good for the curiosity, it's good for the young designer, too, to have the possibility for show the product in a few of the best locations of the world.
And sometimes, we organise... well, I have one idea that I consider super good. I tell you next month.
Oh, come on.
It's very good, easy.
Come on. Tell us, tell us. Don't be shy.
Fashion is very, very aggressive and super quick and smart. I tell you in one month, my promise. I come to London your office, I tell you.
OK. OK, I'm going to hold you... I'm going to hold you to that. But tell me before you tell everybody else.
Let me get in as a scoop.
OK, good. Now, the appointment of Chiara Ferragni got a lot of attention. Tell me about that. And, you know, is this is part of your attempt to appeal to a younger audience, isn't it?
It's an easy consideration. And we want that the young generation understand what we do... not only product. With Chiara, it's not a product agreement, it's not a marketing agreement. She stays with us, and we tried to have together some ideas for solidarity, and for the welfare, and for everything regard... everything that is around the young generation, that's it.
We start in one or two weeks with one or two projects. This is the idea - simple. We have a part of our board that follows some of our projects worldwide around, inside our factories, around our factories. And when it's a big project, like Colosseum for Italy, we have three different levels of approach. With Chiara the idea is that only we had important ideas for the young generation.
LVMH. You sold 75bn euros worth of your own shares to LVMH investment vehicle Delphine at the end of April. And so LVMH's stake in the company is now 10 per cent. What does this mean for the Tod's group?
And I mean, obviously there's been, given the consolidation in the industry, and the fact that a lot of independent brands have been snapped up by the giants, there's been a lot of speculation that Tod's is going to join the LVMH portfolio.
We are personally friends for a long time, us and our family. Bernard go to the 3 per cent more or less...
3.2 per cent, yeah.
...before we arrived to the stock market 20 years ago, more or less. I am in the LVMH board for the last 15 years, more or less. And the reason is easy, because we have the same idea about luxury, about fashion, about the fashion system.
And at the same time if we have an occasion for to do something in the future, if it's possible, we try to do. The reason is 7 per cent for arrive 10 per cent for given message that we like to stick together. And we are ready for to do something if it arrives the occasion, that's it.
So what you're saying is that it's not impossible that one day Tod's will be part of LVMH.
I have one family who is a son, a nephew. We love what we do to do, I think. I don't have idea about that. But if one day I decide, I believe in people like Bernard. But no problem, nothing...
You want to make sure that if it were to ever happen it would be Bernard.
100 per cent, for sure.
And what would your plans be, then, for Tod's, if you were ever to retire?
I hope that the group of people that is around me, plus one or two people that may be I need this person to guide their company today with my brother, better than me, better than me. I need the one year for finish the... for prepare the real team.
And nobody believe me, but I am ready. I am ready for a minimum the 60 per cent or 70 per cent of my time free and 30 per cent for watch. And I quote the number, the direction.
So nobody believes it, but you are ready to step back... not to retire, but...
100 per cent, 100 per cent.
But not to step back 100 per cent, to step back 60 per cent.
I love to control what the people are doing. And I love to have my head in marketing project and good ideas. It's a good reason for don't will be hold, you know.
Yes, I know. Let me ask you one... I think we're running out of time.
You don't believe me.
But let me ask you...
You don't believe me.
I do believe you, I do believe you. You like control.
Let me ask you one last question, just about what the mood in Italy right now. Because you have had a very significant change of government, and you have Mario Draghi now leading the government.
How do you think he's doing?
I think that Draghi is the right person. And generally, he's 100 per cent perfect for a moment like this. I think that Draghi, we was involved, me and him together, in one board 20, 25 years ago for two years. I know him. He is a very good person. He believes in what we do.
And I think the people out of Italy respect him a lot. In this moment for us it's very important. It's not the only man, of course. Maybe, I hope, tomorrow arrive the new generation of politics that want to do the best we want, I want, we need. But at the moment, Draghi is the best doctor for this moment.
You don't think that people are thinking too much of him as a saviour? Because Italy's problems are obviously very deep. It's going to take more than one man to fix them.
Of course, of course. Now, where the people... you need to divide the people. The simple people now think about life, see, think about surviving this terrible moment, see, think about how to protect the job, and don't think for long term.
But what you say is true. Now is the right moment in Italy for try to change with a big turnaround. There is a good group of young politicians between left right, young. And I see this is another big occasion for trying to build a very good future for our country.
And I also think the business community needs to do a lot of things, more than now. The business community is not only a money machine. Of course, there is a fantastic group of managers, the owner of companies. I think we need to do what the-- what people like Draghi has now.
It's not sufficient anymore to say that, OK, I am a businessman, successful, I have a good group of employees, and I pay tax. Now the next step... worldwide, not only in Italy... for us, is that businessmen need to do a lot of things for other people, especially people that need that we give a big support. If we don't do that, I don't think the society tomorrow changing better.
Diego Della Valle. It's been great talking to you. Thanks for being with us. And I will see you in one month in London.
I'm coming. I'm coming. My big pleasure is very, very happy to see you today, and the other people, too. I study better English for when I arrive in London.
You're English is perfect. Thank you.
Ciao. Good luck. Ciao. Ciao tutti.