Safilo Group S.p.A. reported total net sales fell 16 percent at its U.S. retail chain Solstice in the third quarter ended Sept. 30 due to their concentration in tourist areas.

Safilo Group's net sales in the Americas reached €133.1 million during the quarter, up 19.2 percent, or just 1.5 percent in currency-neutral (c-n) terms compared with €111.7 million in the third quarter of 2014.

The company said quarterly performance was characterized by two diverging trends, with a further acceleration of the wholesale business, up 5.8 percent at constant exchange rates despite the demanding comparison base in Q3 2014, and retail sales at Solstice stores declining by 16.0 percent, driven mainly by the reduced tourism flows and high store exposure to those affected locations.

Safilo Group's total net sales grew 9.0 percent to €284.8 million compared with the same quarter of 2014, due almost entirely to the
weaker Euro. Sales grew just 0.9 percent in currency-neutral (c-n) terms.

quarter [c-n] sales growth in our going-forward portfolio was
high-single digits,  reflecting the continuing and effective rebalancing
of our licensed brand  portfolio and development of our proprietary
brands, with Polaroid and Smith  showing good growth and Carrera
registering brand health improvements  and changing over to the new
collection,” said CEO Luisa Delgado.

Regional breakdown

In Europe, sales reached € 101.7 million, up 5.6 percent  (+5.4 percent at constant exchange rates) compared to  €96.2 million in the same  quarter of 2014.

The Latin  American business declined 21.6 percent (-8.1 percent c-n) to €10.8 million due to the unfavorable business environment in Brazil, while sales in Mexico were up double digits. 

In Asia, sales were €31.4 million, compared to €33.6 million in the third quarter of 2014, down 6.5 percent (-15.5 percent c-n).

Net sales in the rest of the world, comprising  mainly the Group’s business in the Middle East and African region,  grew 32.1 percent to  €7.8 million (+32.3 percent at constant exchange rates  compared to  €5.9 million in the third quarter of 2014). 

Margins suffer
Safilo Group's consolidated gross profit reached  €167.5 million, up 6.6 percent compared to €157.1 million in  the same quarter of 2014. Gross margin moved to 58.8 percent of net sales from 60.1 percent.

EBITDA was €14.7 million, up 1.2 percent compared to the EBITDA of  €14.6 million recorded in the same period of 2014. EBITDA margin was 5.2 percent of net  sales in Q3 2015, compared to 5.6 percent in Q3 2014.  EBIT reached  €4.5 million, down 20.3 percent compared to the EBIT of  €5.7 million  registered in Q3 2014. EBIT margin was 1.6 percent of net sales in Q3 2015, compared  to 2.2 percent in Q3 2014.

Group net income came to  €2.4 million, substantially in line with a year earlier, thanks in part to a gain from an equity investment.