MILAN — Safilo Group Spa on Thursday reported a decline in second-quarter profits and revenues from the year-ago period, following a series of one-off effects that impacted the bottom line and the impact of the Armani license termination, which — coupled with a strengthening of the euro — weighed on the top line.
Excluding the sales from Armani brands not renewed at the end of 2012, the company reported a 6 percent increase in organic sales growth in the core sunglasses and prescription frames segments for the period, on the back of “good performances recorded in a number of countries in continental Europe, in key accounts and the travel retail business,” Safilo said after the close of trading in Milan.
In the three months ending June 30, net profits were 6.7 million euros, or $8.7 million, down 30.1 percent on the year-ago period. However, adjusted net profits, which strip out one-off factors like the chief executive officer succession plan unveiled by the group on June 19 as well as some restructuring costs in the European market, came in at 12.2 million euros, or $15.9 million, up 27.3 percent on the second quarter of 2012.
Net sales in the period at the group — which produces eyewear under license for brands including Gucci, Marc Jacobs and Bottega Veneta as well as house brands including Safilo, Polaroid and Carrera — dropped 7.2 percent on the year-ago period to 301.4 million euros, or $391.8 million.
Thanks to “efficiency improvements” and other measures, the company’s gross profit margin increased in the period to 63.8 percent from 58.9 percent in the three months to end-June 2012.
Dollar amounts have been converted at average exchange for the periods to which they refer.
In the first six months of the year, Safilo’s net profit was 20.1 million euros, or $26.3 million, down 6.7 percent on the year-earlier period, while net sales decreased by 2.4 percent to 598.4 million euros, or $783.9 million. However, again stripping out one-off factors, net profit in the period climbed 18.9 percent to 25.6 million euros, or $33.5 million.
Outgoing Safilo ceo Roberto Vedovotto said he was “very proud of Safilo’s performance during one of the most challenging semesters in the company’s history in light of the full impact of the Armani licenses termination.”
Vedovotto pointed to 8 percent growth in the company’s “go-forward brands,” to the “continuous success of all our main licensed brands” and to the “expansion of the Safilo brands, including the development of the Polaroid brand in the American and Asian markets.”
Safilo’s net debt in the first semester dropped by 13.1 percent to 200.8 million euros, or $263 million, “with the further decline in financial leverage reaching a record level in Safilo’s most recent history,” Vedovotto said.
In geographic terms, Safilo said that its “turnover continued to perform best in Europe, thanks to the strong performance of its organic business” in its core continental markets, especially France and Germany, as well as in the U.K. and Russia.
Crisis-hit Spain and Portugal showed “signs of recovery,” Safilo said, although sales through independent opticians in the company’s home market of Italy “further declined.”
Organic sales growth slowed in the quarter in the Americas, following a “slowdown in the U.S. and certain Latin American markets during the month of June,” Safilo said. In particular, retail sales slowed in the region, while Brazil was affected by in part by civil unrest that broke out toward the end of the quarter.
However, Safilo said, the period was “positively influenced” by the launch of the Polaroid brand, with the new Polaroid Plus collections and by “general growth in the prescription frames segment.”
In terms of sales channels, travel retail and key account channels “continued to drive the growth of Safilo products in stores.”
In terms of brands, the company reported “highly satisfactory progression” by the portfolio of principal licensed brands, like Dior, Boss and Céline in the high-end segment and Boss Orange and Marc by Marc Jacobs in the fashion segment.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye