Safilo Reports Overall Net Sales Decline for 2018, Anticipates Further Savings and Improved Top Line for 2019

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PADOVA, Italy–The Board of Directors of Safilo Group S.p.A. has approved the company’s consolidated financial statements for the year ended Dec. 31, 2018 which will be submitted for approval by the shareholders at the Annual General Meeting to be held in a single call on April 30, 2019. The board said it has decided not to propose the payment of a dividend to the next annual general meeting. As anticipated, the company reported that net sales for 2018 equaled €962.9 million, down 4.0 percent at constant exchange rates and 7.0 percent at current exchange rates compared to €1,035.3 million in 2017.

In 2018, the wholesale business declined by 4.9 percent at constant exchange rates, Safilo said, citing such reasons as the exit of the Céline license, just partially counterbalanced by the launch of the new Moschino, Love Moschino and rag & bone licenses, and the overall positive results of the Group’s own core brands, driven in particular by a strong season of Polaroid in Spain and the good progress of the brand Safilo in the optical business. The company also pointed to the generally positive performance of the licensed brands in the contemporary and premium segment with a weak performance of sunglasses in the fashion luxury segment.

Safilo’s economic results improved due to the Group’s progress on its cost saving initiatives. 2018 adjusted EBITDA stood at €47.5 million, up 15.5 percent compared to €41.1 million in 2017, with the margin increasing by 90 basis points from 4.0 percent to 4.9 percent of net sales.

In the fourth quarter of 2018, the adjusted EBITDA equaled a profit of Euro 10.3 million compared to the loss of Euro 2.1 million recorded in the same quarter of 2017. Safilo closed the year with an adjusted Group net loss of Euro 26.7 million compared to an adjusted net loss of Euro 47.1 million in 2017.

In the fourth quarter of 2018, Safilo’s net sales equaled €249.1 million, up 1.3 percent at constant exchange rates and 1.8 percent at current exchange rates. The wholesale business, which declined by 3.3 percent at constant exchange rates, experienced a positive sales recovery in Europe, that was counterbalanced by the weak performance of Asia and the Rest of the World as well as ongoing softness in North America, the company reported. In North America, full year net sales declined by 8.1 percent at constant exchange rates and by 9.5 percent in the fourth quarter, with the wholesale business down 6.6 percent and 6.7 percent in the respective periods. Sales at the 80 Solstice stores in the U.S. (102 stores at the end of December 2017) declined by 16.5 percent in the year and by 23.9 percent in the fourth quarter, caused by a combination of declining traffic and store closures.

Angelo Trocchia, Safilo Group CEO commented, “The year closed substantially in line with our expectations, with a mid-single digit decline in net sales and first signs of improvement at the operating and net result level. The second half of 2018 was a key moment for Safilo as we started to implement the new 2020 plan and we secured our financial structure through a capital increase and a new debt financing. This was also a period in which we intently focused on shaping a new commercial organization in all our key markets, bringing back capabilities and leadership from the industry, with the aim of improving our go to market execution and putting customer service at the heart of what we do"

He added, "2018 was an intense year in which we renewed our partnership with important brands like Banana Republic, Fossil, havaianas and Tommy Hilfiger, and we signed new agreements first with Missoni and with Levi’s at the very beginning of 2019. In 2019, we envisage the opportunity to recover top line growth and above all a sustainable level of profitability, reflecting the progress of our cost saving projects.”

In 2019, Safilo said it plans to gradually revive top line growth, leveraging the implementation of new commercial organizations in the Group’s key markets and the upgrading of customer service levels. For the current year, Safilo will continue its cost savings plan aimed at recovering a sustainable economic profile.