End of Gucci license negatively impacts Safilo sales

In its preliminary results announcement for the year ended December 31, 2017, Safilo Group S.p.A. said that sales were 1,047 million euros (1,303 million dollars) for the year and declined by 194 million euros (241 million dollars) at constant currency compared to 2016. Safilo expects profitability for the year to be impacted by the larger decline in sales than planned in the fourth quarter leading to an adjusted preliminary full year EBITDA of 38-40 million euros (47-49.7 million dollars).

The company said that the reduction in sales was caused both by the change of the Gucci license into a supply agreement, representing 155 million euros (193 million dollars) or negative 12 percent and the implementation of the new order-to-cash IT system in the Padua DC early in the year. Safilo added that Dior collections experienced a decline after several years of strong growth. The total of all other licenses, as well as the company-owned core brands, grew single digits. The net sales of the going forward brand portfolio decreased by 3.9 percent at constant exchange rates.

Q4 net sales declined to 249.2 million euros

In the fourth quarter of 2017, Safilo’s preliminary total net sales were 249.2 million euros (310 million dollars), contracting by 53 million euros (66 million dollars) at constant currency compared to 2016. The net effect of exiting the Gucci license and entering the supply agreement, the company said, accounted for 44 million euros (55 million dollars) of the decrease, while net sales of the going forward brand portfolio declined by 3.7 percent at constant currency and 5.2 percent excl. retail.

On the one hand, Safilo added, the emerging markets continued their post Padova DC turnaround started in the third quarter, up again high double digits. The North of Europe started its turnaround in the fourth quarter, now also up double digit. On the other hand, the South of Europe still suffered from the tail-end of the Padua DC issues with fall/winter collection sell-in restrained by the late deliveries of the spring/summer collection. North America declined driven by the wholesale business, while the performance of the Solstice stores in the United States showed an improvement with 2.7 percent same store sales performance at constant exchange rates.