Safilo posts drop in sales and profit, extends CEO contract

In the third quarter, Safilo Group net sales amounted to 235 million euros, a decline of 9.8 percent at current exchange rates, which was significantly affected by the strengthening of the euro against the dollar and a number of other currencies.

Safilo closed the nine month period with net sales of 785.1 million euros, down 5.6 percent at current exchange rates and 3.6 percent at constant exchange rates, while the performance of the organic business was negative by 2.3 percent.

The company also announced the extension of Angelo Trocchia as chief executive officer for a further three year period.

Commenting on the trading results, Trocchia said: “In the third quarter, sales performance remained soft, but improving compared to the previous quarter, thanks to the return to growth of our sports business in North America, where, however, weakness persisted in the eyewear market, particularly in the contemporary segment.”

Highlights of Safilo’s Q3 and nine month results

The company said in a release that at constant exchange rates, the contraction of the quarter was 3.9 percent, improving from negative 6.6 percent recorded in the second quarter due to the return to growth of Smith's sports business in North America.

In the third quarter, sales in North America amounted to 109.6 million euros, down 12.2 percent at current exchange rates, heavily impacted by the strengthening of the euro against the dollar. At constant exchange rates, sales in the region declined by 4.9 percent, marking a significant improvement compared to the 11.3 percent drop recorded in the first half of the year.

It was due to the return to growth of the Smith’s sports business in physical stores, which added to the already positive development of the brand in the DTC channel. However, the performance of the area remained soft in the eyewear market, especially of the sunglass product category. In the nine months, Safilo's sales in North America amounted to 341.1 million euros, down 11 percent at current exchange rates and 9.2 percent at constant exchange rates. Revenues declined 5.7 percent at the organic1 level.

In Europe, sales for the quarter totaled 85.4 million euros, down 10.7 percent at current exchange and 6.1 percent at constant exchange driven by the sales decline in the former GrandVision chains, net of which sales in the area recorded an increase of around 1 percent compared to the same period last year.

In the nine months, Safilo's sales in Europe reached 321.1 million euros, down 3.5 percent at current exchange, 1.5 percent at constant exchange and 2.3 percent at the organic level. In the period, sales in Europe, net of the business in the former GrandVision chains, grew by approximately 7 percent at constant exchange rates.

In Asia and Pacific, Q3 sales amounted to 15.2 million euros, down 5.9 percent at current exchange and up 2.3 percent at constant exchange rates. Safilo’s sales in Asia and Pacific reached 43.8 million euros in the nine months, up 6 percent at current exchange and 11.2 percent at constant exchange rates.

In the rest of the world, quarterly sales reached 24.8 million euros, up 3.9 percent at current exchange and 5.9 percent at constant exchange rates. Safilo’s sales in the nine months reached 79.2 million euros, up 7.3 percent at current exchange and 7.1 percent at constant exchange rates.

Safilo’s operating performance across quarter and nine month period

In the third quarter, the adjusted gross profit equaled 135.5 million euros, down 3.2 percent, while the adjusted gross margin improved by 390 basis points to 57.7 percent.

The quarterly adjusted EBITDA equaled 18.1 million euros and a margin on sales of 7.7 percent, down respectively 20 percent and 100 basis points.

In the nine months of 2023, the adjusted gross profit equaled 459.1 million euros, substantially flat compared to the same period in 2022, while the adjusted gross margin improved by 340 basis points, from 55.1 percent to 58.5 percent.

The adjusted EBITDA equaled 75.4 million euros and a margin on sales of 9.6 percent, down respectively 11.5 percent and 70 basis points.