Safilo reports 3.5 percent decline in H1 net sales

Total net sales of 651.1 million euros (725.6 million dollars) in the first six months of 2016 at Safilo Group registered a decline of 3.5 percent at current exchange rates and of 2.1 percent at constant currencies while sales of the going-forward brands portfolio increased by 5.3 percent. Business recovered momentum during the second quarter, with revenues broadly flat at current exchange rates but growing 2 percent at constant exchange rates.

Commenting on the company’s performance, Luisa Delgado, CEO, said, “In the first six months, our going forward brands portfolio made good progress, growing by 5.3 percent at constant exchange rates. We continued to sharpen our focus on our own core brands, by concluding the integration of Polaroid with the closure of the Vale site, qualifying our stylistic direction for Carrera, while Smith built market share despite a difficult sports market environment in North America.”

Financial highlights of the first half and Q2

Wholesale revenues equalled 612.4 million euros (682.3 million dollars) decreasing one percent at constant exchange rates. Total wholesale revenues of the going-forward brands increased 6.8 percent.

Gross profit of 394.6 million euros (439.6 million dollars) declined 3.7 percent, while the gross profit margin of 60.6 percent was in line with the margin recorded in the first half of 2015. Adjusted EBITDA of 58.3 million euros (64.9 million dollars) declined 7 percent. Adjusted EBITDA of the wholesale business was up 0.7 percent. Adjusted EBIT of 37.5 million euros (41.7 million dollars) decreased 12.8 percent.

In the second quarter wholesale revenues equalled 327.6 million euros (364.9 million dollars), increasing 3.7 percent at constant exchange rates. Total net sales of the going-forward brands increased by 9 percent at constant exchange rates, while wholesale revenues increased 11.2 percent.

Gross profit of 210.4 million euros (234.4 million dollars) declined 1.4 percent in the second quarter and adjusted1EBITDA of 33.1 million euros (36.8 million dollars) increased 9.7 percent. Adjusted EBITDA of the wholesale business equalled 31.8 million euros (35.4 million dollars), up 22 percent.

European market reports rise in net sales

H1 net sales in Europe of 291.4 million euros (324.7 million dollars) increased 5.3 percent at current exchange rates and 6.1 percent at constant exchange rates. In the second quarter, net sales in Europe grew 12 percent at current exchange rates and 13.2 percent at constant exchange rates, reaching 161.4 million euros (179.8 million dollars). In the first half, sales performance of the going forward brands in Europe increased 11.8 percent at constant exchange rates, accelerating to a 18.6 percent increase in the second quarter, thanks to a broad based strong performance in all key markets, in particular Italy, Germany, France and UK, but also to recovering trends in Russia after a difficult 2015.

Net sales in North America of 259.8 million euros (289.4 million dollars) declined 3.9 percent at current exchange rates and 3.4 percent at constant exchange rates. Wholesale revenues of 221.2 million euros (246.4 million dollars) were down 1.1 percent at current exchange rates and in line at constant exchange rates. In the second quarter, net sales in North America of 132.7 million euros (147.8 million dollars) were down 3.6 percent at current exchange rates and 1.2 percent at constant exchange. In the period, wholesale revenues of 110.8 million euros (123.4 million dollars) were substantially in line with Q2 2015 at current exchange rates, while they grew 3 percent at constant exchange rates.

Sales in the 118 Solstice stores in the United States declined 17.7 percent and 18.2 percent at constant exchange rates, respectively in H1 and Q2 2016. In the first half, sales performance of the going forward brands in North America grew by 2 percent at constant exchange rates, accelerating to a growth of 3.1 percent in the second quarter of the year.

H1 net sales in Asia of 58.8 million euros (65.5 million dollars) contracted 29.2 percent at current exchange rates and 27.8 percent at constant exchange rates. In the second quarter, net sales of 32.1 million euros (35.7 million dollars) declined 29.5 percent at current exchange rates and 27.3 percent at constant exchange rates, with the business remaining difficult particularly in China, Hong Kong, Japan and Korea while South East Asia and Australia continued to perform positively. Sales performance of the going forward brands in Asia was negative by 14.4 percent and 14.2 percent at constant exchange rates respectively in the first half and in the second quarter of the year.

Net sales in the Rest of the World of 41 million euros (45.6 million dollars) decreased 7.9 percent at current exchange rates, while increasing 2 percent at constant exchange rates. In the second quarter, net sales in the area equalled 23.4 million euros (26 million dollars), flat at current exchange rates and increasing 9.5 percent at constant exchange rates, with the business in the IMEA region recording a very positive performance and Latin America turning positive. Sales performance of the going forward brands was positive by 7.6 percent at constant exchange rates, accelerating to 12.3 percent in the second quarter of the year.

picture:safilo