In the third quarter, net sales at Safilo Group S.p.A. reached 219.1 million euros, growing by 3 percent at current exchange rates and 6 percent at constant exchange rates led by the significant rebound experienced by the wholesale market in North America, and the full-quarter contribution deriving from the recent acquisitions of Blenders Eyewear and Privé Revaux. The company said in a statement that the latter, together with the continuing progress recorded by Smith’s D2C sales and by the group’s business generated through internet pure players, propelled Safilo’s total online sales to around 16 percent of group total turnover. The positive sales development and the ongoing implementation of the group’s cost saving actions also resulted in Safilo returning to a positive adjusted EBITDA of 14.3 million euros, up 9.3 percent.
Commenting on the third quarter results, Angelo Trocchia, Safilo Chief Executive Officer, said: “After we were heavily impacted by the Covid-19 outbreak and the consequent global lockdowns between the first and the second quarters of the year, in the third quarter our business had a positive reaction reflecting, on one side, the sales rebound recorded in July as an expected catch-up effect after the strong H1 pandemic impacts, and, on the other side, a dynamic US market continuing into August and September, making North America the main driver of our recovery.”
Highlighs of Safilo’s Q3 performance
The company added that the recovery of Safilo’s organic business in the third quarter of 2020 was driven by strong performance in North America, where the group’s organic revenues were up 12.1 percent at constant exchange, all of Safilo’s core licensed brands, from Kate Spade to Tommy Hilfiger to Jimmy Choo, enjoying a solid momentum driven by the growth of the prescription frames business, Smith brand recorded double-digit growth in the sports store channel and more than doubled their turnover in online channels. In North America, the Group’s total sales, including the new brands acquired, stood at 113.1 million euros, up 41.5 percent at current exchange rates and 45.9 percent at constant exchange rates compared to the same quarter of 2019.
The company experienced mixed trends in Europe, with net sales equaling 79.3 million euros, down 17 percent at current exchange and 16.4 percent at constant exchange rates with 15.2 percent drop in the wholesale business. In Italy and in all the main countries of the region, sales to independent optician stores posted positive performances, growing in the different markets from mid-single digit to double digits compared to the same quarter of 2019.
The company witnessed net sales in Asia Pacific reach 15.9 million euros, down 9.4 percent at current exchange rates and 6.4 percent at constant exchange rates. The continued hardship of the travel retail business, down in the region by 63 percent, Safilo said, was more significantly offset by the surge recorded by the company in Mainland China, where supportive domestic demand and the contribution of the group’s new brands, namely Levi’s and Ports, pushed sales up 83 percent at constant exchange rates. The company reported continued sales weakness in the Rest of the World, where Latin America and the IMEA countries remained strongly impacted by the pandemic and the economic downturns still affecting Brazil, India and Middle East markets. Net sales in the area were 10.9 million euros, down 45.2 percent at current exchange rates and 35.6 percent at constant exchange rates.
Review of Safilo’s results in nine-month period
In the first nine months of 2020, total net sales at Safilo equalled 554.7 million euros, down 21.7 percent at current exchange rates and 21.1 percent at constant exchange rates, while Safilo’s organic business declined 27.8 percent at constant exchange rates with 28 percent drop in the wholesale business, while the contribution of the acquisitions accounted for 47.7 million euros in the first nine months, supporting the Group’s business performance in North America. In the first nine months, Blenders Eyewear and Privé Revaux grew respectively 79 percent and 96 percent. Safilo’s total online sales, including acquisitions, accounted for around 13 percent of the group’s total net sales, from 3.7 percent in the same period of 2019.
Safilo managed to reduce the group’s negative adjusted EBITDA in the first nine months to 13.9 million euros compared to a loss of 28.3 million euros in the first half of 2020. The Group’s adjusted EBITDA was a profit of 54.3 million euros in the first nine months of 2019. Gross profit for the period was 261.2 million euros compared to 375.1 million euros recorded in the first nine months of 2019, with the gross margin at 47.1 percent of sales compared to 52.9 percent in the same period of 2019.