Safilo Approves Q2 and First Half 2014 Financial Results

PADUA—The Board of Directors of Safilo Group S.p.A. (SFL:MI) has approved today the results of the second quarter and first half of 2014, ended June 30.

For the second quarter of 2014, the group sales amounted to €313.1 million, up 3.9 percent compared to €301.4 million in the same quarter of 2013. Sales for the wholesale segment increased by 4.3 percent to €289.9 million from €277.9 million in the second quarter of 2013, with exchange rate movements reducing growth by 3.4 percent. The adjusted group net profit for the second quarter totaled €15.0 million, up 23.3 percent compared to the adjusted €12.2 million in the second quarter of 2013.

“This first semester of 2014 offers important early confirmation that we are on the right track towards mid-term sustainable profitable growth, centered on quality of product, sales & distribution, and operations,” said Luisa Delgado, CEO of Safilo Group.

The quarterly performance also enabled the company to achieve a positive performance also for the first six months of the year as a whole, with net sales of €606.3 million, up 1.3 percent compared to €598.4 million in the first half of 2013, the company said. Wholesale sales for the first six months of the year equaled €566.6 million, up 1.6 percent compared to €557.6 in the same period of 2013. The adjusted group net profit for the first half of 2014 rose to €31.5 million, marking an increase of 23.1 percent compared to €25.6 million of the first half of 2013.

“Following our decision to single-mindedly focus on quality distribution, and enter into new channels with differentiated offerings, we are pleased to report both acceleration of the sales growth in Q2 and continued improved mix for the semester. Brand driven differentiation of distribution enables us to offer the highest selectivity for our highest-end fashion luxury brands, while at the same time promote broader points of sale for contemporary luxury brands, and successfully develop new channels for the ‘mass cool’ segment, where e.g. Polaroid plays,” Delgado added.

An analysis of sales by geographical area shows continuing positive sales momentum in Europe, accelerating with respect to the first three months of the year, and a recovery in the North American market after the downturn linked to bad weather in the first quarter. In the U.S., the quarter saw growth in the sunglass segment and a good performance from the department store channel, with Polaroid, Fossil and Boss Orange, as well as Fendi, Bobbi Brown and Jack Spade, making the most important contributions. Like-for-like sales through the 130 directly operated Solstice stores also returned to growth, rising 1.7 percent.

Quarterly sales in the American market amounted to €123.0 million, compared to €121.2 million for the same quarter of 2013, with exchange rate movements reducing growth by over 6 percent (growth in this area was equal to 1.5 percent). In the first half, the American market registered a slight downturn of 1.6 percent.

Retail sales in the U.S. amounted to €23.2 million in the second quarter, down 0.9 percent at current exchange rates, and to €39.7 million for the first half, down 2.7 percent.

Safilo closed the first half of 2014 with net debt of €166.1 million, down 41.4 million compared to €207.5 million recorded at the end of the first quarter. The reduction of net debt is explained for €22.5 million by the effect related to the option component of the new equity-linked bonds, the company said.

The adjusted economic results do not include non-recurring expenses for €3.0 million related to the voluntary exit incentives recently signed with employees and trade unions, as the solidarity contracts come to an end, and to some reorganization costs. Net of the fiscal effect, the total impact was equal to €2.2 million. In the second quarter of 2013, non-recurring expenses were equal to Euro 7.4 million and related for around €6.0 million to the CEO succession plan announced by the group on June 19, 2013 and for around €1.4 million to some restructuring expenses in the European market.