Safilo Group S.p.A. reported net sales of Smith Optics sunglasses, goggles and helmets drove a 16.8 percent increase at its Sports Product segment in the third quarter ended Sept. 30. Safilo’s Sports product sales reached €25.6 million ($34mm) during the quarter, compared with €22.2 million in the third quarter of 2013.
At Solstice, Safilo Group’s U.S. chain of 130 sunglasses boutiques, sales reached €22.0 million ($29 mm), up 5.4 percent (+5.6 cn) compared to €20.9 million registered in the third quarter of 2013. In the first nine months of 2014, Solstice generated sales of €61.8 million ($84mm), up 2.9 percent c-n.
Safilo Group, which derives most its revenue from selling prescription eyewear, reported overall sales of €261.2 million ($346 mm) in the third quarter, up 7.4 percent c-n, compared to €243.4 million recorded in the same quarter of 2013. Wholesale revenue reached €239.2 million ($317 mm), up 7.5 percent c-n from €222.5 million in the third quarter of 2013.
Economic results in the third quarter confirm the progress of our product centered strategic and operational direction,” said Safilo Group CEO Luisa Delgado. “Our proprietary brands responded, with Polaroid continuing its very strong development, and Smith gearing up for its global expansion, while we prepare for Carreras further acceleration next year. Our licensed brands also responded, with Dior, Celine, Jimmy Choo, Boss, Max Mara, Tommy Hilfiger and Kate Spade leading the way, while we prepare for potential future licenses.”
The North-American market was the growth driver of the quarter, thanks to the positive performance of the brand portfolio in the independent optician channel and in the department stores as well as the strong performance at Solstice. Revenues for the third quarter amounted to €125.2 million ($166 mm), up 14.1 percent compared to €109.7 million in the same quarter of 2013, or 14.6 percent c-n. In the first nine months, regional sales reached €361.1 ($490 mm) up 3.3 percent, or 7.3 percent c-n. compared to €349.5 million in the same period of 2013.
In the European market, Group sales reached €98.6 million ($131 mm), up 1.9 percent (+1.7 c-n) from €96.8 million in the third quarter of 2013. For the first nine months of 2014, regional revenues grew by 4.7 percent to €368.2 million ($499 mm) compared to €351.7 million in the same period of 2013 a c-n increase of 5.0 percent. European countries which outperformed in the first part of the year, namely France, Germany and Spain, remained very positive, whereas the UK business was affected by a difficult comparison base, given the double digit growth recorded in the third quarter of 2013.
Sales in emerging markets accelerated the pace of growth recorded in the first half of the year, to around +27 percent, thanks in particular to the strong performance of the Chinese and Brazilian markets.
Gross profit was €157.1 million ($208 mm), up 8.5 percent compared to €144.8 million in the same period of 2013. Gross margin improved 60 basis points to 60.1 percent. For the first nine months, gross profit and gross margin reached €540.6 million ($733 mm) and 62.3 percent respectively , compared with €516.9 million and 61.4 percent in the first nine months of 2013.
“Product mix and quality of our distribution channels were also the drivers for our improvement in gross margin reaching 62.3 percent in the first nine months of the year,” Delgado explained.
Selling and marketing expenses increased 9.7 percent to €111.9 million, or 42.8 percent of net sales, compared with 41.9 percent a year earlier. General and administrative expenses grew 8.2 percent to €39.9 million, or 14.9 percent of net sales, compared with 14.8 percent in the third quarter of 2013.
“We are re-investing significantly in the modernization of our organization, chiefly through IT enabled sales, demand and production planning standardization and simplification, and brand building” Delgado said. “We are initiating a Global Supply Network overhaul, and organizing Product Development.”
EBITDA equaled €14.6 million ($19 mm) compared to €16.3 million recorded in the third quarter of 2013. The EBITDA margin declined to 5.6 percent of revenues from 6.7 percent. Investments in brand building capabilities and changing the commercial organization, as well as the major contractual engagements impacted on the results. EBIT totaled €5.7 million ($8 mm) compared to €6.8 million for the same period of 2013. EBIT margin declined 60 bps to 2.2 percent. Safilo reported a Group net profit of €2.4 million ($3 mm) for the quarter, compared with €1.7 million in the same period of 2013.
