Safilo Reports Q2 and First Half 2013 Results

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PADUA, Italy—The board of directors of Safilo Group S.p.A. (SFL.MI) have approved the company’s financial results for the second quarter and first half of 2013.

In the second quarter net sales reached €301.4 million, down 7.2 percent compared to sales of €324.6 million for the second quarter of 2012, reflecting the negative impact of exchange rate movements and termination of the Armani brands not renewed at the end of 2012. Sales in the wholesale business equaled €277.9 million from €301.2 million in the second quarter of 2012, down 7.7 percent, though according to the company, the organic business saw an increase in sales of 6.0 percent due to the good performance of a number of countries in continental Europe, in key accounts and the travel retail business. The second quarter of 2013 ended with a net profit of €12.2 million, compared to €9.6 million of the same quarter of 2012, for an increase of 27.3 percent.

“I am very proud of Safilo’s performance during one of the most challenging semesters in the company’s history in light of the full impact of the Armani licenses termination,” said Roberto Vedovotto, CEO of Safilo Group. “Our results are in fact very significant both from an economic and a financial standpoint, and also as far as strategic achievements are concerned.”

In the first six months of the year Safilo reported net sales of €598.4 million, down slightly (-2.4 percent) compared to the first half of 2012 at €613.3 million, partly due to a strengthening of the Euro against the main international currencies, the company said. Additionally, the company pointed to the significant negative impact of the termination of brands phased out in 2012 during the period, which they added, was almost entirely offset by the increase of organic sales in the core sunglasses and prescription frames segments, up by over 8 percent in the half. In the first half of 2013, net profit thus rose to €25.6 million, an increase of 18.9 percent compared to the first half of 2012 at €21.5 million.

“The organic growth of our go-forward brands exceeded 8 percent in the semester thanks to the continuous success of all our main licensed brands, but also to the expansion of the Safilo brands, including the development of the Polaroid brand in the American and Asian markets,” Vedovotto said. “This was also a period in which, by following our core strategy, we were able to sign a new and very important multiyear license agreement with Fendi, one of the most prestigious Made in Italy brands and part of the LVMH Group. At the same time, we secured our licensed portfolio through the early and long-term renewal of our strategic partnerships with Marc Jacobs and Fossil.

“In terms of new license agreements, we signed a contract with Bobbi Brown and, as far as new partnerships are concerned, we finalized an initiative for new Polaroid branded polarized ophthalmic lenses with Essilor, a Carrera by Jimmy Choo capsule collection and, to further strengthen the Safilo brand, we entered into an agreement with Marc Newson for a limited edition of Safilo branded products,” he added.

The analysis in terms of geographical areas shows that the company’s sales continued to perform best in Europe, thanks to the strong performance of its organic business in its core continental European markets, such as France and Germany, in the U.K. and in new markets in this area, especially Russia. In the second quarter of 2013, organic growth in the American market slowed with respect to previous quarters, primarily due to a slowdown in the U.S. and in certain Latin American markets during the month of June, the company said. In the second quarter, wholesale sales in the region amounted to €97.7 million compared to €107.2 million in the same period of 2012, a decrease of 8.8 percent, while at retail, Solstice stores in the U.S. recorded sales of €23.5 million.

In the first half of 2013, American wholesale sales reached €199.0 million from €207.4 million in the first semester of 2012, down 4.1 percent. In the same period, Solstice stores recorded sales of €40.8 million, up 1.8 percent.

The company said, thanks to careful management of working capital, net debt fell further at the end of June, amounting to €200.8 million, down by approximately 20 million compared to €220.4 million recorded at the end of March 2013 (€215.3 million at the end of December 2012 and €231.0 million at the end of June 2012).

“We are convinced that these results are a direct product of the actions undertaken over recent years and, more importantly, that we have succeeded in placing Safilo in a solid position from which to reach its objectives of further future growth,” Vedovotto concluded.

A playback of the conference call to discuss these results, and its accompanying presentation, will be available until Aug. 3, 2013 at www.safilo.com/en/investors.html.