Safilo Group Sales Increase in Both the Fourth Quarter and Full Year 2012

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PADUA, Italy— Safilo Group S.p.A. ended 2012 with top-line growth, broadly in line profitability and further reduction of net debt, according to financial statements just released for the full year 2012. Net revenues for 2012 grew by 6.7 percent to €1,175.3 million from €1,101.9 million in 2011. For the full year 2012, the net profit reached €25.9 million, down 7 percent from the net result of €27.9 million in 2011. Earnings contributed to the reduction of net debt from €238.3 million in 2011 to €215.3 million at the end of 2012.

Wholesale turnover grew 6.3 percent for the year to €1,094.6 million from €1,029.3 million during 2011. In Europe, sales in 2012 reached €470.6 million, a 5.7 percent increase when compared with €445.1 million in 2011. Revenues in the American market for the 12 months were €488.7 million, up 7.5 percent from €454.5 million in 2011, with the contribution from the Solstice retail chain up 11.2 percent to €80.7 million. In Asia, 2012 closed up 7.3 percent at €198.8 million.

During 2012, Safilo reorganized its industrial footprint due to the declining production volumes as a result of the phase-out of the Armani brands, the company said. This included the reduction of working hours in the Italian plants, on the basis of the solidarity contracts signed in July with trade unions, which will be effective until August 2014.

Roberto Vedovotto, CEO of Safilo Group, commented, “We are satisfied with the results achieved in a challenging 2012, characterized by the slowdown of the global economy and by the ongoing consumer spending reduction in Europe. In this scenario, our strategic priority was to focus on the top-line growth of our portfolio and on profitability, as well as to maintain a solid capital structure, despite the expected Armani phase-out negative effect. In 2012, we adapted our industrial footprint, timely redefining the organization and costs of the Group’s production capacity in Italy with a strong focus at appropriately managing the social framework.”

He continued, “The performance of organic sales through go-forward brands, which consistently grew around 6 percent throughout the year, confirmed the competitive edge and diversification of our licensed brands, supporting the portfolio enhancement also via the anticipated renewal of the Hugo Boss Group and Max Mara licenses.

“In 2012, we focused on the importance of the Safilo Brands for our future growth also through the acquisition of Polaroid, which became part of our portfolio last April. During these first nine months of direct management, we have reorganized the brand’s distribution in the already presided European markets and set the foundations for its international development starting from Polaroid’s first market 75 years ago, the United States,” he said.

During the fourth quarter of 2012, net sales increased by 16.6 percent to €312.9 million when compared with €268.4 million for the fourth quarter of 2011. The company attributed this to Polaroid sales, in particular, and the continuous organic growth of the business. Net profits for the fourth quarter of 2012 were €5 million, up from €1.3 million in the last quarter of 2011.

The wholesale business increased in the fourth quarter of 2012 by 17.1 percent to €293.7 million from €250.9 million in the fourth quarter of 2011.

Geographically, revenues recorded a strong recovery in European markets, which reached €128.6 million compared to €101.9 million for the same quarter in 2011, a 26.2 percent increase. The company attributed this double digit increase to sales of Polaroid along with good performance by the prescription frame business, especially in the Carrera collections.

Safilo also benefited during the fourth quarter from its competitive strength in high growth markets such as Russia and by success in the travel retail and key accounts channels, according to the report. The American market recorded a positive sales trend in the independent opticians’ channel in the U.S., during the fourth quarter, and by double-digit growth in the Latin American markets. Brazil and Mexico were key drivers of the Group’s growth in the emerging markets, supported by the main collections in the portfolio, from the high-end and luxury to the diffusion segment brands such as Tommy Hilfiger, Marc by Marc Jacobs and Boss Orange. In Brazil, continuous growth of Carrera made this the fourth main market for this leading Safilo brand.

Also in the fourth quarter, the American wholesale market increased 13.3 percent at current exchange rates to €105.8 million from €93.4 million in the fourth quarter of 2011, a 10.1 percent increase at constant exchange rates.

In the U.S., sales of directly operated Solstice stores increased in the fourth quarter by 9.7 percent to €19.2 million when compared with €17.5 million for the same period of 2011, which is in line with the organic trends registered by Safilo in the U.S. sunglass segment.

Sales in Asia for the last quarter of 2012 grew 7.8 percent to €54.1 million from €50.2 million in the fourth quarter of 2011. This positive performance was attributed to the development of the high growth markets and channels, as well as to the improvement recorded in the most mature market of the area, Japan.

Safilo Group’s board also approved new financing in the amount of €100 million, with €60 million maturing June 30, 2015, and €40 million maturing June 30, 2015.