Safilo Group reports loss of 6.6 mn euros in H1

For the first half of 2017, Safilo Group’s adjusted net result equalled a loss of 6.6 million euros (7.8 million dollars) compared to a profit of 22.9 million euros (27 million dollars) in H1 2016. The company’s total net sales in the second quarter were 315.3 million euros (373 million dollars), down 9.8 percent at current exchange and 10.6 percent at constant exchange rates, taking H1 2017 total net sales to 552.6 million euros (654 million dollars), down 15.1 percent at current exchange and 16.2 percent at constant exchange rates.

Commenting on the first half results, Luisa Delgado, the company’s CEO, said in a media release: “We delivered on our commitment to recover during Q2 our back orders at the Padova global DC. At the operating level, we continued to make good progress with the implementation of our cost savings program and overheads productivity plans.”

Financial review of Q2 and H1 results

The company’s ‘Going Forward Brand Portfolio’ net sales grew 1.2 percent at constant exchange and 2 percent excl. retail in the second quarter. In H1 Going Forward Brand Portfolio net sales declined 6.3 percent at constant exchange and 5.7 percent excl. retail. In the first half, wholesale revenues were 519 million euros (615 million dollars), down 15.3 percent at current exchange and 16.3 percent at constant exchange rates compared to 612.4 million euros (725 million dollars) in H1 2016. In the second quarter, wholesale revenues were 295.2 million euros (349 million dollars), down 9.9 percent at current exchange and 10.6 percent at constant exchange rates.

At the operating level, in Q2 the adjusted EBITDA reached 34 million euros (40 million dollars), increasing 2.9 percent compared to the same quarter of 2016. First half adjusted EBITDA equalled 27.8 million euros (32 million dollars), down 52.3 percent compared to the same period of 2016, which the company said was due to the weak performance recorded in the first quarter of the year driven by the challenges around the implementation of the new order-to-cash IT system in the Padova DC.

The adjusted EBITDA margin increased to 10.8 percent of sales from 9.5 percent in Q2 2016, due to operating cost saving initiatives, resulting in a significant improvement of the operating expense leverage. For total H1, the adjusted EBITDA margin declined to 5percent of sales from 8.9 percent in H1 2016.

H1 gross profit of 287.2 million euros (340 million dollars) declined 27.2 percent, while the gross profit margin equalled 52 percent of sales compared to 60.6 percent in H1 2016. Adjusted EBIT of 7 million euros (8.2 million dollars) decreased 81.4 percent in the first half, while the adjusted EBIT margin equalled 1.3 percent of sales from 5.8 percent in H1 2016.

Gross profit totalled 170.4 million euros (202 million dollars), down 19 percent, while gross profit margin equalled 54 percent of net sales compared to 60.2 percent in Q2 2016.

Safila performance across markets

H1 net sales in Europe equalled 267.2 million euros (316 million dollars), down 8.3 percent at current exchange and 7.8 percent at constant exchange rates. In the first half, the sales of the Going Forward Brand Portfolio declined by 6.7 percent at constant exchange rates, due to the significant shortfall in sales order fulfillment recorded in the first quarter of the year.

Q2 net sales in Europe reached 166 million euros (196 million dollars), up 2.9 percent at current exchange and 3.3 percent at constant exchange rates. In the quarter, the sales of the Going Forward Brand Portfolio grew by 6.9 percent at constant exchange rates.

H1 net sales in North America equalled 221.8 million euros (262 million dollars), down 14.6 percent at current exchange and 17.1 percent at constant exchange rates. Q2 net sales were 107.4 million euros (127 million dollars), down 19.1 percent at current exchange and 20.8 percent at constant exchange rates.

In the first half, the wholesale revenues of the Going Forward Brand Portfolio declined by 2.3 percent at constant exchange rates, due to the negative performance recorded by the portfolio in the second quarter, down 7.3 percent at constant exchange rates. The company said, quarter reflected the continuing weakness of the market environment in department stores.

Sales of the 103 Solstice stores in the United States (118 stores at the end of June 2016) were 33.5 million euros (39 million dollars) in H1 and 20.1 million euros (23 million dollars) in Q2, declining respectively 15.8 percent and 10.7 percent at constant exchange rates compared to the same periods of 2016. Same store sales performance was negative by 11 percent in H1 and by 5.6 percent in Q2 2017.

H1 net sales in Asia equalled 28.9 million euros (34 million dollars), down 50.8 percent at current exchange and 51.4 percent at constant exchange rates. In Q2, net sales were 17.9 million euros (21 million dollars), down 44.4 percent at current exchange and 44.6 percent at constant exchange rates.

First half net sales in the rest of the world equalled 34.7 million euros (41 million dollars), down 15.5 percent at current exchange and 20 percent at constant exchange rates. In Q2, net sales were 24.1 million euros (28 million dollars), up 3.1 percent at current exchange and down 1.6 percent at constant exchange rates.

Picture:Safilo website