Safilo Offsets Negative Full-year Performance
MILAN — Italian eyewear maker Safilo Group SpA reported a slightly better-than-expected decline in annual sales, boosted by a rebound of its North America and Asia Pacific sales and wholesale business in the second half of the year.
In a press statement released after market close on Wednesday, Safilo said in the 12 months ending Dec. 30 its preliminary 2020 revenues were down 16.9 percent at current exchange to 780.3 million euros, compared with 939 million euros the previous year. Analysts in Milan said the figures should be well-received by the financial markets. One analyst, speaking on the condition of anonymity, said his firm projected Safilo’s 2020 net sales to settle at 777 million euros and added that “buoyant sales in key markets like China and Safilo’s cost-cutting measures helped counterbalance steep declines [in the first half due to the impact of COVID-19].”
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In the second half of 2020, Safilo’s net sales grew by 4.5 percent at constant exchange. In the fourth quarter, net sales grew 3 percent at constant exchange to 225.6 million euros (falling by 2.1 percent at current exchange), as its Chinese business more than tripled in the last quarter of the year.
Safilo said its positive third- and fourth-quarter performance helped its earnings before interest, taxes, depreciation and amortization (adjusted for non-recurring items) to “return to break even” for the full year. The EBITDA result also exceeded analyst expectations, with some expecting an EBITDA loss of up to 15 million euros. In addition, before the accounting code IFRS 16, the Padua-based company’s preliminary net debt stood at 179 million euros.
Year-over-year, sales in Europe plunged 26.4 percent to 330.4 million euros, representing 42.3 percent of total revenues. Sales in North America grew 2.5 percent to 342.5 million million euros, accounting for 43.9 percent of the total. Revenues in Asia Pacific fell 22.2 percent to 60.7 million euros, accounting for 7.8 percent of total, and sales in the Rest of the World category dove 40.3 percent to 46.8 million euros.
In November, chief executive officer Angelo Trocchia noted that the recent acquisitions of Blenders Eyewear and Privé Revaux also boosted the group’s online business, together with the progress of the Smith brand’s direct-to-consumer channel. In the fourth quarter, Blenders and Privé Revaux lifted the group’s North America business by 14.1 million euros.
Overall, Safilo’s has been focusing on its digital transformation, its direct-to-consumer strategy and increasing its share of business-to-business. In August, Safilo launched its new b-to-b platform in Europe and, in November of last year, it rolled out a new Customer Relationship Management system.
In addition to its own brands Carrera, Polaroid, Smith and Safilo, the group produces and distributes eyewear for labels ranging from DB Eyewear by David Beckham, Missoni, Marc Jacobs and Moschino to Tommy Hilfiger, Under Armour and Levi’s. This year marks the exit of the lucrative Dior brand. The exit of the Fendi label is expected in the second half of 2021.
Despite the ongoing pandemic and economic challenges ahead, Safilo said it continues to focus on strategic opportunities.
“The demand of consumers and retail activities in the various markets continued to focus on prescription frames, a product category which is a strategic priority for Safilo and where the Group has been making significant progress in terms of product offer, service level, customer engagement and digital connection thanks to its new b-to-b platform and CRM [customer relationship management] system,” the company said.
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