Safilo posts 21.3 percent drop in Q1 net sales

In the first quarter of 2017, Safilo’s total net sales equalled 237.3 million euros (258 million dollars), down 21.3 percent at current exchange and 22.8 percent at constant exchange rates, compared to 301.6 million euros (328 million dollars) in the first quarter of 2016.

The company said, as already anticipated on March 15, 2017, Q1 2017 total net sales, economic and financial results were heavily impacted by the start-up of the new SAP information system in the distribution centre in Padua and the exit of the Gucci license and its replacement by the strategic product partnership agreement with Kering for the product development, manufacturing and supply of Gucci eyewear.

Financial highlights of the quarter

In the quarter, the net sales of the going forward brand portfolio were down 14.9 percent at constant exchange or 14.5 percent excl. retail, within the range of expected decline of 15 percent to 20 percent communicated on March 15, 2017. Without this impact, Safilo said, net sales of the going forward portfolio would have grown low single-digit compared to the same period of last year.

Sales in Europe equalled 101.2 million euros (110 million dollars), down 22.2 percent at current exchange and 21.6 percent at constant exchange rates. In the period, the sales of the going forward brand portfolio declined by 23.9 percent at constant exchange rates.

Sales in North America were 114.5 million euros (124 million dollars), down 10 percent at current exchange and 13.2 percent at constant exchange rates. In the period, sales in the 105 Solstice stores in the United States (a reduction of 16 stores, in line with its turnaround plan, compared to the 121 stores at the end of March 2016) remained weak, falling by 19.9 percent at current exchange and by 22.6 percent at constant exchange rates. Same store sales performance was negative by 17.4percent.

The North America wholesale business equalled 101 million euros (109 million dollars), down 8.5 percent at current exchange and 11.8 percent at constant exchange rates. On the other hand, the wholesale revenues of the going forward brand portfolio increased by 2.6 percent at constant exchange rates.

Sales in Asia were 11.1 million euros (12 million dollars), down 58.6 percent at current exchange and 59.5 percent at constant exchange rates. In the period, the sales of the going forward brand portfolio in the region were down 32.7 percent at constant exchange rates. Rest of the World sales were 10.6 million euros (10.9 million dollars), down 40 percent at current exchange and 44.3 percent at constant exchange rates. In the period, the sales of the going forward brand portfolio declined by 34.7 percent at constant exchange rates.

Gross profit was 116.8 million euros (127 million dollars), down 36.6 percent, while gross margin declined to 49.2 percent of net sales compared to 61.1 percent in the first quarter of 2016. Adjusted EBITDA was equal to a loss of 6.2 million euros (6.7 million dollars) down 2.6 percent of net sales compared to a positive adjusted EBITDA of 25.2 million euros (27 million dollars) or 8.4 percent of net sales in the first quarter of 2016.

Picture:Facebook/Galleria Safilo