PADOVA, Italy – The board of directors of Safilo Group S.p.A. [SFL.IM] reported the group’s results for the first half of the year. The company noted that it experienced ‘improving overall momentum” as the six month period progressed, in particular from sales of what it refers to as its “going forward” brands in Europe, North America and Rest of World, namely IMEA, and in the cost saving and operational improvement programs.

Net sales for the first six months of 2016 reached €651.1 million, registering 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 (-0.3 percent) but growing 2.0 percent at constant exchange rates. This reflected the improved sales performance of the going-forward brands portfolio, increasing in the second quarter by 9.0 percent at constant exchange rates and more than offsetting the negative impact of the brands that the Group stopped/will stop servicing. Progress was particularly evident in Europe as well as in the Group’s core business in North America and in IMEA, while Asia remained subdued, the company said.

Wholesale revenues equaled €612.4 million compared to €627.9 million in the first half of 2015, decreasing 1.0 percent at constant exchange rates.

At the operating level, first half 2016 adjusted EBITDA was €33.1 million with adjusted EBITDA margins of 8.9 percent 40 basis points lower than in the first half of the prior year, but it recorded an improvement of 90 basis points in the second quarter, to 9.5 percent of sales, which the company attributed to higher cost savings and better operating leverage.

Luisa Delgado, CEO, commented,“In the first six months, our going forward brands portfolio made good progress, growing by 5.3 percent at constant exchange rates, thanks to the broad based positive trends across the different market segments in which we are active. In the second quarter, we achieved sales acceleration, recovering a considerable part of the first quarter performance driven by the service shortfalls that had prevented us to fully leverage the sales opportunities of our order book. Our gross margin was in line with last year while we progressed our supply network modernization focused on in-sourcing production into our own worldwide plant network and reshoring back to Italy, and simplifying our manufacturing and logistic flows. At the operating level, we progressed with the implementation of our cost savings program to improve our overheads productivity.”

She added, “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.”

For the first six months, net sales in North America reached €259.8 million, a decline of 3.9 percent current exchange rates and 3.4 percent at constant exchange rates. Wholesale revenues of €221.2 million were slightly down at current exchange rates (-1.1 percent) and substantially in line (-0.4 percent) with € 223.5 million in the same period of 2015 at constant exchange rates.

Sales in the 118 Solstice stores in the U.S. declined 17.7 percent in the first six months of 2016 while sales in Europe increased in the period, with net sales in Europe of €291.4 million.