Safilo reports 9 percent rise in Q3 net sales

Safilo Group net sales for the first nine months grew by 10.6 percent at current exchange rates to 959.7 million euros (1,044.3 million dollars) and by 1 percent at constant exchange rates. Net sales in the third quarter increased by 9 percent at current exchange rates to 284.8 million euros (309.9 million dollars) and by 0.9 percent at constant exchange rates, which the company said continues to reflect robust business in Europe, North America and in the new Middle East region, and weaker performances in Asia and Brazil.

“In the third quarter, we further continued our comprehensive business reinvention, delivering continued growth in revenues, improving our operating leverage, and generating healthy cash flow through our strong focus on working capital management. Third quarter constant currency sales growth in our going-forward portfolio was high-single digits, reflecting the continuing and effective rebalancing of our licensed brand portfolio and development of our proprietary brands, with Polaroid and Smith showing good growth and Carrera registering brand health improvements and changing over to the new collection,” said Luisa Delgado, CEO of the company.

Nine months and Q3 financial highlights

In the first nine months gross profit increased by 6.8 percent and gross margin reached 60.2 percent of sales. In the third quarter, gross profit grew by 6.6 percent, while gross margin decreased to 58.8 percent of sales, negatively impacted by foreign exchange.

At the operating level, adjusted EBITDA was down 10.3 percent in the first nine months, but the Group reported for the first time in the year an increase for the third quarter, up 1.2 percent against last year. The adjusted EBITDA margin stood at 8.1 percent and 5.2 percent of sales respectively in the first nine months and in the third quarter of the year.

Results driven by growth in Europe and North America

Sales momentum in the first nine months was driven by Europe, where Safilo’s business continued to perform well in the third quarter thanks to strong results in France and Italy in particular, and continuing robust performance of Germany and Iberian countries. In the first nine months of the year, sales in Europe increased 4.7 percent or 4.5 percent at constant exchange rates. In the third quarter, sales were up 5.6 percent or 5.4 percent at constant exchange rates.

Net sales in North America were grew 23.1 percent at current exchange rates and by 2.4 percent at constant exchange rates in the first nine months. In the third quarter, sales grew 19.2 percent at current exchange rates and 1.5 percent at constant exchange rates. The quarterly performance was characterized by a further acceleration of the wholesale business, up 5.8 percent at constant exchange rates and retail sales at Solstice stores declining by 16 percent at constant exchange rates, driven mainly by the reduced tourism flows.

Latin American sales declined 2.8 percent at current exchange rates and 0.8 percent at constant exchange rates. The Latin American business declined 21.6 percent over the third quarter and 8.1 percent at constant exchange rates due to the unfavourable business environment in Brazil, while sales in Mexico were up double digits. Sales in Asia over the first nine months declined by 4.1 percent, with the third quarter continuing to be impacted by Safilo’s strategic reorientation in Asia as announced at the end of last year. Third quarter sales declined 6.5 percent at current exchange rates and 15.5 percent at constant exchange rates.

Net sales in the rest of the world, comprising mainly the Group’s business in the Middle East and African region, were up 31.1 percent and 30 at constant exchange rates in the first nine months. In the third quarter, the business reported growth of 32.1 percent in the rest of the world and 32.3 percent at constant exchange rates.