PADOVA, Italy—Safilo Group S.p.A. (SFLG.MI) reported its results for the first six months of 2017. Safilo cited the challenges relating to the implementation in January 2017 of a new Order-to-Cash IT system in the Padua Distribution Center, which negatively impacted a large part of the group’s worldwide sales order fulfillment in the first quarter.

By the end of June the resulting back orders had been successfully recovered and full operations re-established. Also as previously announced, the group’s sales and economic results reflect the exit of the Gucci license at the end of 2016.

For the 2nd quarter, three months ending June 30, total net sales equal €315.3 million, down 9.8 percent compared to last year at current exchange rates and 10.6 percent at constant exchange rates, taking first half 2017 total net sales to €552.6 million, down 15.1 percent at current exchange rates and 16.2 percent at constant exchange rates.

In the second quarter, the company’s “Going Forward Brand Portfolio” saw net sales increase by 1.2 percent at constant exchange rate (+2.0 percent excluding retail), over last year’s strong second quarter comparison base, when the business grew 9.0 percent at constant exchange rate (+11.2 percent, excluding retail). For the first half of 2017, the group’s Going Forward Brand Portfolio saw net sales decline 6.3 percent at constant exchange rates (-5.7 percent excluding retail).

At the operating level, in Q2 2017 the adjusted EBITDA reached €34.0 million, increasing 2.9 percent compared to the same quarter of 2016. First half 2017 adjusted EBITDA was €27.8 million, down 52.3 percent compared to the same period of 2016.

In the first six months, the group’s adjusted net reflected a loss of €6.6 million compared to a profit of €22.9 million in the comparable period of 2016.

In North America, first half net sales were €221.8 million, down 14.6 percent at current exchange rates and 17.1 percent at constant exchange rates compared to €259.8 million in first half 2016. Second quarter 2017 net sales were €107.4 million, down 19.1 percent at current exchange rates and 20.8 percent at constant exchange rates compared to €132.7 million in the prior year second quarter.

Sales of the 103 Solstice stores in the U.S. (118 stores at the end of June 2016) were €33.5 million in the first half of 2017 and €20.1 million in Q2, declining 15.8 percent and 10.7 percent respectively at constant exchange rates compared to the same periods of 2016. Same store sales performance was negative by 11.0 percent in the first half and by 5.6 percent in Q2 2017.

Safilo’s CEO, Luisa Delgado, commented, “We delivered on our commitment to recover during Q2 our back orders at the Padova global DC. In the process, we also started to establish new standards for better customer service going forward. We thank our customers for their trust and patience, and all Safilo employees for their hard work and dedication. This difficult start slowed down Western Europe Q2 order intake. In Emerging Markets, CEE and IMEA, going forward portfolio net sales grew in first half while in China they were in line.”

She added, “North America wholesale sales slowed in Q2, affected by a combination of the weaker market dynamics in the department stores channel, and the impact of the renewed strategic direction we are driving in the market for solid commercial partnerships with independent opticians.

“Our own Core Brands made a positive contribution to the Going Forward Portfolio performance in the second quarter, resulting in a first half substantially in line with previous year, thanks to the strong results of Smith, the new Polaroid Product Collections and campaigns, and progress in the Carrera turnaround.”

Delgado noted, “At the operating level, we continued to make good progress with the implementation of our cost savings program and overheads productivity plans. We shall continue to progress this throughout the remainder of the year, while increasing our efforts on order generation based on our Fall-Winter product collection and go-to-market campaigns.”

At the end of June 2017, the group’s net debt stood at €112.7 million, from €111.3 million at the end of March 2017 and €102.8 million at the end of June 2016.