Safilo revenues halve in Q2, posts loss

In the second quarter of 2020, Safilo S.p.A. posted total net sales of 114.5 million euros, down 54 percent at current exchange rates and 53.7 percent at constant exchange rates with wholesale business down 55.2 percent. In the first half, group’s net sales equalled 335.6 million euros, down 32.3 percent at current exchange rates and 32.7 percent at constant exchange rates with wholesale business down 33.2 percent.

Commenting on the trading performance, Angelo Trocchia, Safilo Chief Executive Officer, said in a statement: “As we had anticipated to the market in May, our second quarter sales and economic results were heavily impacted by the massive shutdown of commercial activities across the world in April, and the very gradual and patchy reopening of stores for prescription frames and sunglasses starting to occur in May as lockdowns were eased in many countries. In these two months, this business context resulted in a sales drop of approximately 75 percent compared to the same period last year. The global pandemic has undoubtedly elevated the importance of e-commerce, as the surge of the digital commerce business has been demonstrating, continuing to grow strongly even today as stores reopen. In Safilo, we are certainly accelerating on our digital transformation projects.”

Review of Safilo’s Q2 and H1 results

The company said that after downturn in April and May, in June, sales almost doubled compared to the previous month, recording a more limited decline of around 35 percent, with differing levels of recovery among countries, cities and business segments.

In Europe, Q2 net sales equalled 57.2 million euros, down 53 percent at current exchange rates and 52.8 percent at constant exchange rates with wholesale business down 55.9 percent compared to the same period of last year. In June, sales to independent optician stores turned slightly positive in the region, driven by the business rebound recorded in the markets which had first been impacted by the outbreak of Covid-19, namely Italy, France and to a lesser extent Spain. Among the Northern European countries, Germany recorded improvement in June, driven among other things by the double-digit growth of online pure players. In Europe, H1 net sales totalled 165 million euros, down 33 percent at current exchange rates and 32.9 percent at constant exchange rates with wholesale business down 34 percent.

In North America, Q2 net sales were 44.1 million euros, down 45.3 percent at current exchange rates and 46.1 percent at constant exchange rates compared to the same quarter of last year. Safilo’s wholesale revenues declined around 65 percent in quarter, reflecting the slower pace of re-openings which occurred in the region between May and the beginning of June. The newly acquired businesses of Privé Revaux and Blenders Eyewear, the latter completed on June 1st, 2020, added a total of 15.7 million euros to the quarterly sales of North America. H1 net sales in the region totalled 128.5 million euros, declining 24.2 percent at current exchange rates and 26 percent at constant exchange rates compared to H1 2019.

In Asia Pacific, Q2 net sales equalled 8.8 million euros, down 65.7 percent at current exchange rates and 65.5 percent at constant exchange rates compared to the same period of last year. In Asia Pacific, H1 net sales were 23.7 million euros, declining 45.4 percent at current exchange rates and 45.9 percent at constant exchange rates compared to the first half of 2019.

In the Rest of the World, Q2 net sales equalled 4.4 million euros, down 78.9 percent at current exchange rates and 74.3 percent at constant exchange rates compared to the same period of last year. H1 net sales equalled 18.4 million euros, down 49.8 percent at current exchange rates and 46.4 percent at constant exchange rates compared to the first half of 2019.

In the first six months of 2020, Safilo’s online sales grew by around 31 percent at constant exchange rates, after gaining further acceleration in the second quarter, at 38 percent, driven by both the US e-commerce business and the group’s sales via its internet pure player customers.

Safilo posts loss in Q2 and H1

In Q2 gross profit declined 71.2 percent to 39.2 million euros with the gross margin decreasing 20.5 percentage points to 34.2 percent of sales, while H1 gross profit declined 44.2 percent to 148.6 million euros, with the gross margin decreasing 9.4 percentage points, to 44.3 percent of sales.

Q2 adjusted EBITDA equalled a loss of 34.1 million euros compared to a profit of 21.2 million euros in the second quarter of 2019, representing an adjusted EBITDA margin decline of 38.3 percentage points, to negative 29.8 percent of sales. H1 adjusted EBITDA equalled a loss of 28.3 million euros compared to the profit of 41.2 million euros recorded in the first half of 2019, representing an adjusted EBITDA margin decline of 16.7 percentage points, to negative 8.4 percent of sales.

H1 adjusted operating result equalled a loss of 55.2 million compared to an adjusted operating profit of 13.3 million euros recorded in the first half of 2019. The adjusted operating margin declined 19.2 percentage points, to negative16.5 percent of sales. H1 adjusted net result equalled a loss of 63.7 million euros compared to the adjusted net profit of 8.5 million euros recorded in the first half of 2019, while adjusted net margin declined to negative 19 percent of sales.

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