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Safilo witnesses rise in Q4 sales

By Prachi Singh

Mar 12, 2021

Management

In the fourth quarter of 2020, Safilo posted total net sales of 225.6 million euros, up 3 percent at constant exchange rates and down 2.1 percent at current exchange rates. Net sales performance in Q4 2020 allowed the group to continue the recovery of earnings started in the third quarter, registering a positive adjusted EBITDA of 15 million euros, up 34.5 percent, while the adjusted EBITDA margin increased to 6.6 percent of sales from 4.8 percent in Q4 2019, a 180 basis-point improvement.

Commenting on the performance, Angelo Trocchia, Safilo Chief Executive Officer, said: “2020 presented the most challenging market conditions we have ever experienced. We also worked strenuously to maintain a sound financial profile, securing additional liquidity for the group with a new guaranteed term loan facility, and handling, to the best of our abilities, our net working capital requirements through a prudent reduction of our inventories and an effective and balanced management of our cash collection and payments activities.”

Safilo posts 8.9 percent rise in North American business

The company said, positive sales performance reflected the contribution to the group’s North American business of the recent acquisitions of Privé Revaux and Blenders Eyewear, for a total of 14.1 million euros and the improvement of Safilo’s organic business, down 3.6 percent at constant exchange rates, and almost flat at the wholesale business level, at negative 1.6 percent at constant exchange rates. Safilo’s organic online sales grew by 60.9 percent at constant exchange rates, driven by Smith’s D2C channel and by the group’s sales generated through internet pure players.

Safilo saw a rebound of the North American business, up 8.9 percent on an organic basis excluding the acquisitions and at constant exchange rates. Fourth quarter total net sales in North America were up 27 percent at constant exchange rates and 19.2 percent at current exchange rates. In Europe, however, net sales in Q4 fell by 18 percent at constant exchange rates and 16 percent at the wholesale business level and 19.4 percent at current exchange rates.

In Asia Pacific, quarterly net sales were up 28.1percent at constant exchange rates and 24.1 percent at current exchange rates, from negative 6.4 percent in Q3 2020, due to the strong acceleration recorded by the Chinese business, sales acceleration also in Australia. In the Rest of the World, sales were down 6.5 percent at constant exchange rates and 19.7 percent at current exchange rates, driven by the positive performance in the quarter of Brazil and Mexico and the first signs of a recovery materializing also in the Middle East countries.

Safilo’s full year net sales decline by 15.2 percent

Safilo closed 2020 with net sales of 780.3 million euros, down 15.2 percent at constant exchange rates and 16.9 percent at current exchange rates, due to the sharp decline suffered in the first half of the year following the severe lockdowns put in place by governments globally to fight the Covid-19 pandemic.

The company added that business rebound recorded by the group in the third quarter, followed by the positive net sales performance achieved in the fourth quarter allowed Safilo to post an H2 2020 net sales growth of 4.5 percent at constant exchange rates and 0.4 percent at current exchange rates, reaching 444.7 million euros.

In 2020, Safilo’s organic business, excluding the acquisitions, declined by 21.9 percent at constant exchange rates and 21.5 percent at the wholesale business level, while the contribution of the newly acquired Blenders Eyewear and Privé Revaux equalled 61.8 million euros for the full period of consolidation, with the two businesses together growing by 66 percent on a pro-forma performance basis due to the surge of their e-com activities. Safilo’s total online sales, including acquisitions, almost tripled compared to 2019, accounting for around 13 percent of the group’s total net sales.

Sales in North America grew 4.7 percent at constant exchange rates, after jumping 36.3 percent in H2 as a result of the full contribution of the acquisitions, and of the organic business rebound of 10.6 percent at constant exchange rates. After a very difficult first half of the year, in 2020 the North American organic business declined 14.2 percent at constant exchange rates. Sales in Europe were down 25.9 percent at constant exchange rates, as trading activities remained weak also in the second half of the year, at negative 17.3 percent.

The company’s sales in Asia Pacific were down 20.9 percent at constant exchange rates. In the second half, sales performance in Asia Pacific rebounded, up 10.6 percent at constant exchange rates, due to a surging business in China and in Australia. Sales in the Rest of the World were down 32.6 percent at constant exchange rates.

2020 gross profit at 362.5 million euros, was down 24 percent, with the gross margin on sales declining to 46.5 percent from 50.8 percent in the previous year. Ajusted EBITDA at 1 million euros, was down 98.4 percent, while adjusted operating result was a loss of 54.3 million euros compared to the profit of 3.7 million euros recorded in 2019.

Image:Smith, Facebook

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