Page 417

T O D ’ S S PA

RISKS (4) Diego Della Valle ■ A key risk with Tod’s is the major shareholder and the “related party” deals that have and may occur in the future.

■ While we do not believe Mr. Della Valle has advantaged himself at the expense of other Tod’s

shareholders, we acknowledge as a 60.66% owner and family employed within the business (Andrea Della Valle (brother) is the Vice Chairman and Managing Director, Emanuele Della Valle (elder son) is a NonExecutive Director and was the Creative Director of Tod’s, Fabrizio Della Valle (cousin) was an Executive Director (until 2015). These factors present a potential risk of “value transfer”.

■ The Independent Directors of the Company (six out of fourteen directors) are critical and comprise: - Luigi Abete - Luigi Cambri - Pierfrancesco Saviotti - Vincenzo Manes - Romina Guglielmetti - Sveva Dalmasso

(Refer Appendix #1 for further information on the Independent Directors)

■ We believe to date the independent directors have served the minorities well – It is evidenced when Mr. Della Valle sold the Roger Vivier brand to Tod’s for €415M and agreed to reinvest half of the proceeds back into Tod’s at €83.53 per share, a 5.6% premium to the last sales price of €79.11 on 20/11/2015.

■ While the subsequent inventory writedown of €24.2M in 2016, directly relating to the acquisition of the

Roger Vivier brand was disappointing, the minorities share of this writedown was 39.4% of €24.2M. i.e., €9.5M

■ We must also be fair to Mr. Della Valle – “he has more to lose than anybody” if he does not execute well and implement a turnaround in performance. Further his track record of brand creation and execution is very good over time and we feel comfortable investing alongside such a proven performer. He also continues to operate Tod’s in a fiscally conservative manner with an attractive dividend yield for all shareholders.


Profile for Richard

Elevation Capital Research Annual 2018  

Elevation Capital Research Annual 2018