What The Italian Shoe Industry Says About The Economy Right Now

flamboyant shoes

The economic health of two Italian leather shoe companies might not say much about the state of the world economy, but if it did, you’d have reason to be optimistic.

Compare what’s happening right now with Tod’s and Geox. Tod’s is a luxury brand and it’s predicting “excellent” earnings in 2011.

Geox, an affordable leather shoe company that makes shoes that “breathe” so your feet don’t sweat, on the other hand, recently released a disastrous report of its earnings that stated it had declined in value out of nowhere.

A trader told Reuters:

“It’s a disaster, both indicators and outlook were absolutely unexpected.”

“Furthermore, competitors like Tod’s went very well.”

So Tod’s had double-digit revenue growth and Geox forecast a 5% to 8% drop in revenue for the full year. 

If that says anything about the general state of things, we think it’s this.

Tod’s excellent earnings prediction means lots of people are spending $400+ on shoes.

And the Geox disaster means that commodities are going up (that’s why they predicted a earnings drop – because “trends in currencies, raw material prices and labour costs in supplier countries, suggest that margins will come under pressure in the first half of 2011”) and Asian currencies are going to be re-valued higher.

And maybe people are sweating less because they aren’t as worried about financial Armageddon. 

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