Safilo Group S.p.A., the parent of Smith Optics, reported second quarter sales equaled €315.3 million, down 9.8 percent compared to last year at current exchange rates and 10.6 percent at constant exchange rates.
For the first half, total net sales were €552.6 million, down 15.1 percent at current exchange rates and 16.2 percent at constant exchange rates.
Going Forward Brand Portfolio net sales in the second quater grew 1.2 percent at constant exchange rate (+2.0 percent excl. retail), over last year’s strong second quarter comparison base, when the business grew 9.0 percent at constant exchange rate (+11.2 percent excl. retail). In the half Going Forward Brand Portfolio net sales declined 6.3 percent at constant exchange rates (-5.7 percent excl. retail).
Adjusted EBITDA reached €34.0 million, increasing 2.9 percent compared to the same quarter of 2016. In the half adjusted EBITDA equalled €27.8 million, down 52.3 percent compared to the same period of 2016, heavily driven by the weak performance recorded in the first quarter of the year driven by the challenges around the implementation of the new Order-To-Cash IT system in the Padova DC.
The adjusted EBITDA margin increased to 10.8 percent of sales from 9.5 percent in Q2 2016, thanks to effective operating cost saving initiatives, resulting in a significant improvement of the operating expense leverage. For the half, the adjusted EBITDA margin declined to 5.0 percent of sales from 8.9 percent in H1 2016.
In the first half, the Group’s adjusted net result equalled a loss of €6.6 million compared to a profit of €22.9 million in the first half of 2016.
At the end of June 2017, the Group Net Debt stood at €112.7 million, from €111.3 million at the end of March 2017 and €102.8 million at the end of June 2016.
Safilo’s H1 results reflect the previously highlighted challenges relating to the implementation in January 2017 of a new Order-To-Cash IT system in the Padua Distribution Center, which negatively impacted a large part of the Group’s worldwide sales order fulfillment in the first quarter. By the end of June the resulting backorders had been successfully recovered and full operations re-established. Also as previously announced, the Group’s sales and economic results reflect the exit of the Gucci license at the end of 2016.
Luisa Delgado, CEO, commented: “We delivered on our commitment to recover during Q2 our back orders at the Padova global DC. In the process, we also started to establish new standards for better customer service going forward. We thank our customers for their trust and patience, and all Safilo employees for their hard work and dedication.
“This difficult start slowed down Western Europe Q2 order intake. In Emerging Markets, CEE and IMEA, going forward portfolio net sales grew in H1 while in China they were in line.
“North America Wholesale sales slowed in Q2, affected by a combination of the weaker market dynamics in the department stores channel, and the impact of the renewed strategic direction we are driving in the market for solid commercial partnerships with independent opticians.
“Our Own Core Brands made a positive contribution to the Going Forward Portfolio performance in the second quarter, resulting in a first half substantially in line with previous year, thanks to the strong results of Smith, the new Polaroid Product Collections and campaigns, and progress in the Carrera turnaround.
“At the operating level, we continued to make good progress with the implementation of our cost savings program and overheads productivity plans. We shall continue to progress this throughout the remainder of the year, while increasing our efforts on order generation based on our Fall-Winter product collection and go-to-market campaigns.”
In the first half net sales in North America equaled €221.8 million, down 14.6 percent at current exchange rates and 17.1 percent at constant exchange rates compared to €259.8 million in the year ago.. Q2 2017 net sales were €107.4 million, down 19.1 percent at current exchange rates and 20.8 percent at constant exchange rates compared to €132.7 million in Q2 2016.
In the first half, the Wholesale revenues of the Going Forward Brand Portfolio in the North America region declined by 2.3 percent at constant exchange rates, due to the negative performance recorded by the Portfolio in the second quarter (-7.3 percent at constant exchange rates). The quarter reflected the continuing weakness of the market environment in department stores and the impact of the renewed strategic direction the Group is driving in the market for solid and transparent commercial partnerships, in particular with independent opticians.
Safilo’s portfolio encompasses Carrera, Polaroid, Smith, Safilo, Oxydo, Dior, Dior Homme, Fendi, Banana Republic, Bobbi Brown, BOSS, BOSS Orange, Céline, Elie Saab, Fossil, Givenchy, havaianas, Jack Spade, Jimmy Choo, Juicy Couture, kate spade new york, Liz Claiborne, Marc Jacobs, Max Mara, Max&Co., Pierre Cardin, Saks Fifth Avenue, Swatch, and Tommy Hilfiger.
Photo courtesy Smith Optics
