PADUA, Italy—In a year heavily impacted by the Covid-19 pandemic, the board of Safilo Group S.p.A. (Reuters SFLG.MI) approved the company's financial results, noting that Safilo remained focused on the implementation of its Group Business plan. After its first half business setback, Safilo's overall sales and profits grew in the second semester, underpinned, the company said, by the rebound of its wholesale activities in the U.S. and China. Safilo Group's online business more than tripled in 2020, the company said, following the acquisitions of Blenders Eyewear and Privé Revaux, strong progress in Smith and with other internet pure players.

For the group's fourth quarter, Safilo Group reported net sales of €225.6 million versus €230.4 million in Q4 2019, an increase of 3.0 percent at constant exchange rates or a dip of 2.1 percent at current forex. Adjusted EBITDA for the quarter period was €15.0 million versus €11.1 million in Q4 2019, or a steep rise of 34.5 percent.

For the second half of fiscal 2020, the Group's net sales were €444.7 million versus €443.1 million in the second half of 2019, an increase of 4.5 percent at constant exchange rates, and of 0.4 percent at current exchange. Adjusted EBIDTA for the second half was €29.3 million versus €24.2 million or an increase of 21.0 percent.

For the full year, Safilo Group reported net sales of €780.3 million compared to €939.0 million in 2019, a decline of 15.2 percent at constant exchange rates and a decline of 16.9 percent at current exchange rates. Adjusted EBIDTA for the year was €1.0 million compared to €65.4 million in 2019, a drop of 98.4 percent. The board approved consolidated financial statements for the year ended Dec. 31, 2020 and examined the separate financial statements for the year which will be submitted for approval by the shareholders at the annual general meeting to be held in a single call on April 29. The board decided not to propose the payment of a dividend to the next annual general meeting.

Angelo Trocchia, Safilo Group's CEO, commented, “2020 presented the most challenging market conditions we have ever experienced and I want to express my utmost gratitude to all our people, in the plants and in our offices around the world, for their dedication and the excellent job accomplished in such a difficult period of our lives. The health and safety of our people, including the opportunity to manage professional and personal needs with the greatest flexibility, were and continue to be our first priority.

"I am proud of the work done by our organization to advance our medium-term strategic agenda, and considering the unprecedented market conditions, I am satisfied with our ability to contain, as much as possible, the impact to our top and bottom line. In 2020 our net sales fell by 15.2 percent at constant exchange rates and the adjusted EBITDA finished slightly positive, reflecting the significant COVID-19 impact suffered in the first half of the year followed by a solid sales recovery in the second half.

"Our decisive interventions on the cost structure. In 2020, enabled us to deliver 15 million euros of structural overhead savings, already bringing home the majority of the 20 million targeted in our medium-term Plan, coupled with an effective use of the supports made available by governments throughout this pandemic."

Trocchia continued, "We also worked strenuously to maintain a sound financial profile, securing additional liquidity for the Group with a new guaranteed term loan facility, and handling, to the best of our abilities, our net working capital requirements through a prudent reduction of our inventories and an effective and balanced management of our cash collection and payments activities. I want to thank our partners, clients and suppliers, for their support, as together we continued building a more sustainable business in such a crucial year."

He noted, "Q4 reflected again a more challenging marketplace, as fresh restrictions were imposed above all in Europe to contain the second wave of the pandemic. In such a still complex environment, we are therefore particularly pleased with our positive finish to the year, which we think confirms the strategic directions we set out at the end of 2019 and the business priorities we gave ourselves to accomplish our Plan.

"In the last three months of the year, our net sales grew by +3.0 percent at constant exchange rates behind the sequential improvement, quarter on quarter, of our wholesale activities, thanks again to the strength of our North American market, where we kept leveraging on the capabilities we built to better serve our customers in the independent opticians channel. In Q4, the U.S. was a key growth driver, which together with the strong business rebound we experienced in China and Australia, allowed us to almost fully offset the impact of the challenging market environment in Europe and in a number of emerging countries."

Trochia also said, "In a year in which e-commerce and social digital marketing leapfrogged in consumer relevance, the significant progress of Smith’s direct-to-consumer business and the acquisitions of Privé Revaux in February and of Blenders Eyewear in June, gave a strong boost to the digital transformation strategy we announced in December 2019, representing a meaningful support to the recovery we posted in the second half of the year. Our H2 net sales grew by 4.5 percent at constant exchange rates and the adjusted EBIDTA increased by 21 percent.

"Our total online business grew sharply in 2020, contributing around 100 million euros or 13 percent to our Group’s net sales, from around 4 percent in 2019, a clear strategic choice we took before the outset of the pandemic and which we invested in during the year, alongside the significant focus we put on strengthening the partnership with our clients through a brand new B2B platform and CRM system, all improving the customer engagement and enhancing our product offer and service levels."

Trocchia further stated, "In 2020, we continued to renew our portfolio, launching four new brands during the year, Levi’s, David Beckham, Missoni and Ports, and getting ready for the launch of Isabel Marant and Under Armour at the beginning of 2021. Last year, we also started our production footprint overhaul, to realign the Group's manufacturing capacity to the current and future production needs, selling the Martignacco site at the beginning of October and starting the reorganization of the Longarone plant.

"Considering the challenging market scenarios due to the pandemic we are still dealing with, we are now required to take further steps in the direction of our Plan to have a more efficient and competitive industrial footprint, in particular with reference to the declared intention to start a process for the closure of the Slovenia factory in Ormoz. This is for us a very painful choice, dictated by an already complex situation, which has become structural and no longer sustainable, and on which we will be fully committed to identifying, in collaboration with the local trade unions and authorities, all possible solutions to mitigate its social impacts."

Speaking of this year, Trocchia noted, "The business environment at the beginning of 2021 remained affected by the containment actions still in place in many countries to halt the spread of Covid-19 and the uncertainties over the scale and timing of the expected rebound in consumer demand across the different geographies. Our business activity in January and February was in line with our expectations for a more moderate start to the year compared to the very positive sales trends recorded at the beginning of 2020, while the first 10n days of March confirm a significant acceleration compared to the same period last year, the first to be highly impacted by the consequences of the pandemic.

"Sales performance in these months continued to be influenced by the positive business trends in the U.S., the ongoing strength of the online channel and a more marked recovery in emerging markets, while a number of countries in Europe and the travel retail business in Asia remain weak spots. As we continue to maintain a prudent stance on the prospects for the current year awaiting further market evidence of a solid sun season, the main assumption of our work today rests on the opportunity for our business, both owned and licensed, to effectively compensate for discontinued and exiting activities, and on the continuation of our cost reduction plan to recover this year a more positive economic profile.”