Latest News Safilo S.p.A's Trading Update Reflects Strong Q1 Growth Compared to 2020 and 2019 By Staff Wednesday, May 12, 2021 12:27 AM PADOVA, Italy—Citing improvement in sales of its own brands, its online business and overall profitability, Safilo Group S.p.A. (Reuters SFLG.MI) reported its first quarter results. The company's board of directors met yesterday to review and approve the company's Q1 2021 economic and financial key performance indicators. Angelo Trocchia, Safilo Group CEO, commented, “2021 represents a fresh start for our Group, after two years of significant business turnarounds to establish a stronger and more resilient business model, with a diversified brand portfolio and a supply chain right-sized to market reality. We are pleased about this very positive start to the year, which saw our Q1 2021 sales and economic results exceed the first quarter of 2019."Safilo’s Q1 2021 net sales reached €251.4 million, up 20.0 percent at constant exchange rates compared to Q1 2020, the first to be hit by the outbreak of the Covid-19 pandemic. The company noted that its Q1 2021 net sales also grew compared to the same quarter of 2019, up 6.0 percent at constant exchange rates, thanks to the strong performance of the Group’s own brands and core licenses, and to the significant contribution of the new brands in the portfolio effectively compensating the licenses terminated at the end of last year.The positive sales performance of the period was again largely driven by the United States, the company noted, and by a better than expected contribution from the newly acquired ecommerce business, which, coupled with the growth of Smith’s direct-to-consumer (D2C) channel, boosted Safilo’s total online business to 13 percent of its net sales from 5.9 percent in Q1 2020.As anticipated, the company reported that China, Australia and Middle-East markets were the other strong positive contributors of the quarter, while Europe was overall soft, having been penalized by persisting retail restrictions in a number of markets and distribution channels.From an economic standpoint, the positive sales development, coupled with the ongoing cost containment actions and the leaner overheads cost structure deriving from the structural savings achieved by the Group in recent years, led Safilo to a significant improvement of its operating performance, also above the first quarter of 2019. The adjusted EBITDA equaled €25.8 million in Q1 2021, compared to €5.8 million in Q1 2020 and €20.0 million in Q1 2019. In the period, the adjusted EBITDA margin reached 10.3 percent, compared to 2.6 percent in Q1 2020 and 8.1 percent in Q1 2019. Trocchia added, "These results are particularly relevant for us as they were achieved in a health and business environment which remained in the meantime tough in a number of countries and distribution channels, representing a first, encouraging testimony of the growth the Group can aim for thanks to its new business levers. Despite a still mixed macro picture in Europe and uncertainty concerning the evolution of the summer season, we are today on track to deliver a solid second-quarter, again backed by the strength of the United States, the online business, and by the progress of a number of emerging countries.”In the first quarter of 2021, Safilo posted total net sales of € 251.4 million, up 20.0 percent at constant exchange rates and +13.7 percent at current exchange rates compared to €221.1 million posted in the first quarter of 2020, the first to be hit by the outbreak of the Covid-19 pandemic. Q1 2021 net sales were instead up 6.0 percent at constant exchange rates, +1.7 percent at current exchange rates compared to Q1 2019.The positive sales performance reflected the strong recovery recorded by the Group across the brands portfolio, from the strong growth of its own brands Smith and Carrera, to the meaningful rebound of its licenses, in particular Hugo Boss, Tommy Hilfiger, Kate Spade and Jimmy Choo.In line with the aim of the Group’s portfolio overhaul strategy executed in the last two years, the contribution provided to the period by Prive Revaux and Blenders—the latter not yet included in the Group’s perimeter in Q1 2020—and the new licensed brands in the portfolio, among them Levi’s, David Beckham, Missoni, Ports and Isabel Marant, largely compensated for the licenses terminated at the end of 2020.By product and channel, Q1 2021 sales were once more largely driven by the strong growth recorded by prescription frames, confirming the resilience of the product category in optical stores across the different markets, and by Smith’s sport products through its D2C and sport channels.In Q1 2021, Safilo’s online business grew +164 percent, mainly thanks to the contribution of Blenders’ e-commerce, up 79 percent on a pro-forma performance basis, the growth of Smith’s D2C channel, and the Group’s sales generated through internet pure players, the company noted.Safilo also noted "stronger than expected sales growth in the United States across all product categories and brands, thanks to the combined positive effects of the abovementioned contribution of Prive Revaux and Blenders, and the outstanding business momentum in independent optical stores, chains, department stores, and sport shops."In Q1 2021, Safilo’s North America sales totaled €119.1 million, up 53.8 percent at constant exchange rates and 41.1 percent at current exchange rates compared to Q1 2020. Total net sales in North America were up 41.8 percent at constant exchange rates compared to Q1 2019.A still-soft business environment is impacting a number of countries in Europe, where retail restrictions and the lack of tourist flows continued to penalize the sales of sunglasses in big chains, and in specialty channels like boutiques, department stores and travel retail. The company said this was a market context which penalized above all Polaroid, a brand particularly exposed to the European sun markets.The prescription frames business proved very solid for the majority of Safilo’s brands also in Europe, growing compared to both Q1 2020 and Q1 2019.In Q1 2021, Safilo’s European sales equaled €101.5 million, down 5.0 percent at constant exchange rates and 5.8 percent at current exchange rates compared to Q1 2020. Net sales in Europe were down 17.8 percent at constant exchange rates compared to Q1 2019; The company cited a slow-down in Asia Pacific, largely due to the relatively high first-quarter 2020 comparison base in terms of travel retail business and to its exposure to the licenses terminated at the end of 2020. On the positive side, the Group’s sales in China and Australia confirmed the significant growth trajectory recorded in the second half of 2020, proving the effectiveness of the portfolio strategy the Group has been implementing to build a more relevant and sustainable business in APAC. In Q1 2021, Safilo’s sales in Asia Pacific equaled €13.0 million, down 10.8 percent at constant exchange rates and 13.0 percent at current exchange rates compared to Q1 2020. Net sales in Asia Pacific were down 25.3 percent at constant change rates compared to Q1 2019.On an adjusted1 basis, Q1 2021 gross profit stood at €131.2 million, with the margin on sales at 52.2 percent, while the EBITDA equaled €25.8 million, marking an exponential increase compared to € 5.8 million recorded in Q1 2020, and a meaningful improvement of +29.4 percent compared to the adjusted EBITDA of € 20.0 million recorded in Q1 2019. The period benefitted from the ongoing cost containment actions implemented by the Group and from the leaner overheads cost structure deriving from the last two year’s structural savings.