Safilo Group S.p.A., which is using its Smith optics brand to spearhead a new global sports optics business, reported its sales in North America rose 26.9 percent, or 5.3 percent in currency-neutral (c-n) terms,  in the first quarter.
 
The Italian eyewear company said North American sales reached €132.9 million ($150 mm) during the quarter, compared with €104.7 million in Q1 2014. While alll core channels and brands performed solidly , the main department stores were top performers during the quarter.

Safilo's North American businesses include Smith, the sports optics brand which it recently relocated to from Idaho to Portland, OR to spearhead a global sports eyewear design center. Safilo also owns the Carrera, Polaroid, Safilo and Oxydo brands and makes eyewear under licensed brands, including: Dior, Fendi, Gucci, Alexander McQueen, Banana Republic, Bobbi Brown, BOSS, BOSS Orange, Bottega Veneta, Céline, Fossil, Givenchy, HUGO, J.Lo by Jennifer Lopez, Jack Spade, Jimmy Choo, Juicy Couture, Kate Spade, Liz Claiborne, Marc Jacobs, Marc by Marc Jacobs, Max Mara, Max&Co., Pierre Cardin, Saint Laurent, Saks Fifth Avenue and Tommy Hilfiger.

Results for other regions were:

  • Latin America: Safilo's Q1 2015 sales in Latin America rose 30.1 percent at current exchange rates and 23.4 percent c-n, standing at €12.5 million compared to €9.6 million in Q1 2014. Business in Mexico was particularly positive within key accounts, while sales in Brazil also increased strongly, as did the balance of Latin American markets served through distributors.
  • Europe: In Q1 2015, sales in Europe reached €132.9 million, up 2.6 percent (+2.8 percent c-n) compared to €129.6 million in Q1 2014. Sales trends across the region were very resilient, with the Iberian countries, Germany and the Nordic markets continuing to move fast. Italy saw a positive start of the year, while Russia remained weak, reflecting domestic economic  conditions.
  • Asia-Pacific: In Asia-Pacific, Q1 2015 revenues were €39.2 million compared to €43.5 million in the same period of last year (-9.8 percent at current exchange rates, -22.9 percent c-n).

While Australia led with excellent growth, and Japan started to show an early positive impact of a more brand driven commercial approach, the Group continued with the planned requalification of regional distributors that impacted sales negatively in the short term as expected. Korea saw the change from a local distributor-owned department store model to our own in house organization and consequent sales more evenly spread over the year compared to last year’s peak in Q1. Hong Kong saw some general market softness, also felt in China where additionally, order phasing and internal commercial strategy and capability gaps that are being addressed are impacting business delivery. As the Group proceeds with the interventions to create sustainable business models in every subsidiary in Asia including commercial leadership capability, and works these interventions in close partnership with key regional customers and licensors with the objective of getting the region capable to lead with over proportional growth given Safilo’s significant under representation in the region, the Group anticipates to start seeing visible positive impact on its sales towards the last quarter of this year.

Consolidated financial results
In the first quarter of 2015, Safilo Group total revenues were €324.3 million, up 10.6 percent, or 0.8 percent  c-n,  compared to €293.2 million recorded in the same quarter of 2014, benefitting from the strength of the U.S. dollar. 

Gross profit was €196.6 million, up 6.8 percent compared to €184.0 million in the same quarter of 2014 with gross margin moving from 62.8 percent to 60.6 percent. Gross margin reflected obsolescence provisions in relation to still elevated inventory levels and, as expected, a more subdued start of the year as the Group expects COGS savings and inventory interventions to be more skewed to the second half of the year.

Q1 2015 adjusted EBITDA, which exclude €1.2 million in non-recurring items related to restructuring in the EMEA region, was €32.6 million compared to €35.4 million recorded in the same period of 2014. Adjusted EBITDA margin was 10.0 percent of revenues in Q1 2015, compared to 12.1 percent in Q1 2014.

Q1 2015 adjusted1 EBIT was €23.3 million compared to €26.8 million registered in Q1 2014. Adjusted EBIT margin was 7.2 percent of revenues in Q1 2015, compared to 9.1 percent in Q1 2014.

Total financial charges increased to €18.8 million from €2.3 million in Q1 2014 due to the negative impact of exchange rates differences of €10.6 million (positive impact of €1 million in Q1 2014) and the effects of the fair value valuation of the option component embedded in the equity-linked bonds for €4.2 million, driven by an higher average share price in the quarter. In Q1 2015, net financial interests increased to €2.3 million from €1.8 million in Q1 2014.

Net profit reached €2.3 million, compared to the net profit of €16.5 million recorded in Q1 2014.

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                                                                                    Sàfilo Group
S.p.A.

Consolidated income statement

 

 

 

First Quarter

 

 

(Euro/000)

2015

2014

Change %

 

Net sales

 

324,303

 

293,203

 

10.6%

Cost of sales

(127,744)

(109,154)

17.0%

Gross profit

196,559

184,049

6.8%

 

Selling and marketing expenses

 

(133,381)

 

(119,530)

 

11.6%

General and
administrative expenses

(40,382)

(37,734)

7.0%

Other operating income (expenses)

(666)

33

n.s.

Operating
profit

22,130

26,818

-17.5%

 

Share of income (loss)
of associates

Interest expenses and other financial charges, net

 

– (18,777)

 

– (2,340)

 

 

n.s.

Profit before taxation

3,353

24,478

-86.3%

 

Income taxes

 

(1,869)

 

(7,931)

 

-76.4%