Taking Stock: Tod’s Trajector… Macy’s Rewards…

TOD’S TRAJECTORY: If the current economic environment is Darwinian, then Italy’s Tod’s SpA is proving to be among the fittest. While other firms stumble, Tod’s Chairman and CEO Diego Della Valle said last Tuesday his company had made a “positive” start to 2009, after registering an 8 percent gain in earnings and revenues in 2008. “The first signals of the current year may be considered positive,” Della Valle stated, attributing the group’s resilience to high product quality rather than following fashion trends. For the 12 months ended Dec. 31, the Italian shoe and leather goods firm, which owns the Tod’s and Hogan brands, reported net profits of 83.4 million euros, or $122.7 million, on consolidated sales of 707.6 million euros, or $1.04 billion, which were in line with expectations. At constant exchange rates, revenues gained 9 percent to 716.4 million euros, or $1.05 billion. By brand, Tod’s delivered half the group’s revenues, gaining 2.6 percent to 356.7 million euros, or $524.8 million, while Hogan was again the best performer, rising 19.6 percent to 238.7 million euros, or $351.2 million. Overall, the firm’s shoe sales grew 13.7 percent to 485.6 million euros, or $714.5 million. Sales grew in all markets except North America, where they dropped 10.5 percent to 59.3 million euros, or $87.3 million. Dollar figures were converted at average exchange rates for the periods to which they refer. — ANDREW ROBERTS

DARKNESS BEFORE DAWN? Shrinking exports and cuts to personal spending caused the U.S. economy to contract at an annual rate of 6.3 percent in the fourth quarter, according to the Commerce Department’s reading of the gross domestic product, the broadest measure of an economy’s health. Real gross domestic purchases, a measure of sales of goods and services produced both in the U.S. and abroad, decreased 5.9 percent in the fourth quarter, below the 1.5 percent decline in the third quarter, when overall GDP fell 0.5 percent. Nariman Behravesh, chief economist at IHS Global Insight, said the fourth quarter was setting the stage for an “awful” first quarter, which could mark an economy that is close to the bottom. “All the incoming data suggests that the economy will contract by a staggering 7 percent to 8 percent in the first quarter, before the economy begins to stabilize,” he said. “IHS Global Insight expects the decline in real GDP in the second quarter to be ‘only’ 2 percent to 3 percent. Subsequent quarters should show a steady improvement.” Although “steady improvement” could mean a long slog out of the downturn, it should still offer some solace to corporations, which saw their domestic profits fall by 16 percent last year. — EVAN CLARK

RISK AND REWARD: Piloting a retailer through the recession and coming out ahead of the competition is a big job, but Macy’s Inc.’s board is offering big rewards if the firm’s top brass can pull it off. The retailer is ready to reward its top executives nearly 1.3 million shares of stock — more than half of them to Chairman, President and CEO Terry Lundgren — if they can steer the company toward the head of retailing’s equity class during the next three years. The compensation and management development committee of Macy’s board has approved a series of “Founders Awards,” restricted stock units based on the performance of the company’s shares in comparison with 10 other retailers over a three-year period beginning with the current fiscal year. If Macy’s shares perform better than the 66th percentile of the peer group, the executives will receive all the allotted units. The number would dip to 75 percent if Macy’s shares, including reinvested dividends, are above the 50th percentile but below or equal to the 66th percentile, and to zero if “total shareholder return” falls at or below the 50th percentile. Lundgren could qualify for as many as 666,666 units, and four other executives — vice chairs Thomas Cole, Janet Grove and Susan Kronick, and CFO Karen Hoguet — for as many as 151,255. The 10 peer companies being tracked are Dillard’s, Gap, J.C. Penney, Kohl’s, Limited Brands, Nordstrom, Sears Holdings, Target, TJX and Wal-Mart Stores, according to a regulatory filing with the Securities and Exchange Commission. — ARNOLD J. KARR

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