PADUA, Italy—The board of directors of Safilo Group S.p.A. approved the company's consolidated financial statements for the year ended Dec. 31, 2015 and examined the separate financial statements for the year, which will be submitted for approval by the shareholders at the company's annual general meeting to be held April 27.

The group's net sales for the year were €1,28 billion, an increase of 8.5 percent attributed to foreign exchange tailwind. At constant currencies, 2015 net sales were flat compared to 2014, reflecting differing business and market dynamics, the company said. The performance of the group's going forward brands portfolio, which are excluding all brands that Safilo stopped and will stop servicing, showed growth of 13 percent at current exchange rates and 4.3 percent at constant exchange rates.

At the operating level, 2015 adjusted EBITDA margin stood at 8.0 percent of sales versus 10.0 percent in 2014. Safilo closed 2015 with an adjusted Group net of €6.9 million compared to the adjusted net of €44.5 million recorded in 2014.

The company noted that its 2015 adjusted economic results do not include non-recurring costs for a total of €60.5 million, mainly related to the impairment of the goodwill allocated to the Far East business and a provision related to an investigation of the French Competition Authority.

In 2015, the group generated a free cash flow of € 74.8 million, further reducing the group net debt to €89.9 million from €163.3 million in 2014. This reflected the ongoing improvement in net working capital management, the proceeds from the sale of shares held in an associate company for €8.6 million and the first of the three compensation payments of €30 million from Kering received in January 2015.

In North America, Safilo’s sales performance was positive in 2015 in spite of the shortfall recorded by the group in its 125 Solstice stores in the U.S. Net sales were up 19.4 percent at current exchange rates (+0.8 percent at constant exchange rates), totaling €531.3 million compared to €445.1 million in 2014. In Q4, the North America business was up 8.9 percent at current exchange rates but declined by 3.4 percent at constant exchange rates to €127.7 million compared to €117.3 million in Q4 2014.

Safilo's core wholesale business grew by 21.9 percent at current exchange rates to €442.7 million (+3.2% at constant exchange rates compared to €363.1 million in 2014). Dior, Celine, Max Mara and Jimmy Choo grew significantly while Kate Spade became Safilo’s second largest brand in North America after Smith. The latter delivered low single digit sales growth in 2015 behind market share gains in its Snow portfolio but suffered from a soft winter sport season at the end of the year.

Carrera’s North America wholesale business was up almost double digits in 2015, driven by the strong performance on prescription frames and a stable trend in sunglasses, while Polaroid’s sales were up mid-single digits reflecting the commencement of its door expansion

Throughout 2015, Europe was Safilo's main driver of growth. Net sales increased by 6.3 percent (+6.0 percent at constant exchange rates), reaching € 508.6 million compared to €478.5 million in 2014. In the fourth quarter, European net sales growth accelerated further, up 11.1 percent (+10.8 percent at constant exchange rates) to €130.3 million compared to €117.3 million in Q4 2014.

The Group gained market share in the key markets of France, Italy, Spain and Germany, driven by good performance of the license brand portfolio, Dior, Celine, Jimmy Choo, Max Mara and Hugo Boss in particular, the company said. Polaroid sales increased by low single digits, influenced by the strong deceleration of Russia where the Group converted the previous distributor model into a directly managed business. Excluding this negative effect, Polaroid was up high-single digits in the year.

Carrera’s sales performance in Europe was soft in 2015, as the transition to the new brand platform did not yet broadly translate into effective product and in-store execution. Smith saw a satisfactory initiation of its expansion strategy in the sport channel in Europe.

Luisa Delgado, Safilo CEO, commented, "2015, the first year of the 2020 Strategic Plan laid out during our investor day in March, was a period of intense activity for Safilo.

The year saw capex investments of €47.9 million and encouraging progress in the transformation of the business through the rebalancing of the group's brand strategy, development of its go to market strategy, supply network reinvention and IT transformation.

"Europe and the North America wholesale business performed well, together with the key emerging markets of Middle East and Africa and Mexico. We made good progress in the reorganization of the Asian business, introducing new leadership, capabilities and brand plans, while market environment in Brazil remained very challenging.

"Our core strategic license brand portfolio continued to deliver excellent results in terms of product and collection reception with consumers and registered double-digit net sales growth, while our own core brands delivered mixed performance, primarily reflecting the short term impact of our business reorganization and new brand platforms."

Delgado added, "Safilo saw a strong cash flow performance, reflecting good working capital management, and the improving quality of sales, sustainable business practices and efficient business processes, enabling the group to further strengthen its adjusted financial leverage.

"We are committed to our 2020 strategies and goals. 2016 will be a further important year of transition, including the final period of the Gucci license, and we anticipate continued growth of our core license brand portfolio to be complemented with an acceleration of growth on our core brands, and an increasingly visible impact of our cost savings and business transformation initiatives."

Safilo expects 2016 to be characterized by two main distinct business dynamics—the final year of Gucci as a license in the Safilo portfolio and positive organic sales performance by the going forward brands portfolio. From a brand standpoint, licensed brands and Safilo's own core brands are both expected to contribute to growth, bolstered by the 2016 launch of the new partnerships with Givenchy and Swatch.

On the cost structure, Safilo will focus on two main initiatives. First, Safilo aims at continuing the cost saving initiatives in the supply and logistics network, focusing on production and sourcing optimization actions and distribution center streamlining.

Second, and as anticipated in the Simplification strategy of the Company’s 2020 plan, the group is now ready to accelerate the execution of its overhead cost savings initiative. Safilo targets €25 million to €30 million cumulative overhead cost savings by December 2019, behind expected one-off restructuring charges of €20 million.