MILAN — Increasing demand for designer branded eyewear in fast-growing markets such as Asia and Latin America and a strong performance of its own labels helped Safilo Group SpA increase net profits to 27.9 million euros, or $38.8 million, in the year ended Dec. 31, compared with 731,000 euros, or $924,000, the previous year.
Revenues in 2011 rose 2 percent to 1.1 billion euros, or $1.53 billion.
In addition to its own brands, which include Carrera and Safilo, the Italian eyewear manufacturer produces collections for brands such as Giorgio Armani, Alexander McQueen, Balenciaga, Bottega Veneta, Dior, Gucci, Marc Jacobs, Valentino, Yves Saint Laurent and Max Mara. As reported, the license with Armani will end at the end of 2012. In November, Safilo said that it had inked a five-year deal to produce and distribute the Celine brand and that it was buying the Polaroid Eyewear business, an acquisition that is expected to be completed by the end of the first quarter.
Chief executive officer Roberto Vedovotto described 2011 “as a year of achievements and important changes for Safilo Group. In 2011, we built up from the foundations laid down in 2010, recording meaningful economic and financial improvements.” The executive underscored how Safilo enhanced its “organizational and managerial structures to ensure a fast and efficient execution of our plans in all key business areas,” and how the group rationalized its portfolio of licensed brands.
In 2012, operating profit climbed 27.1 percent to 86.2 million euros, or $119.8 million. Earnings before interest, taxes, depreciation and amortization rose 13.7 percent to 122.6 million euros, or $170.4 million.
Dollar amounts have been converted at average exchange for the periods to which they refer.
In the U.S., the group’s performance reflected the ongoing expansion of business in the Latin American markets, a leadership in the main independent opticians’ channel in North America and a good holiday season for the Solstice stores.
Revenues in the U.S. dropped 1.3 percent at current exchange, but would have risen 7.7 percent at constant exchange, reaching 454.5 million euros, or $631.7 million, accounting for 41.2 percent of total sales.
Sales in Asia gained 14.7 percent to 185.3 million euros, or $257.5 million, accounting for 16.8 percent of overall revenues, with China, including Hong Kong, already representing the fourth most important market for Safilo.
Europe continued to be challenging in the last quarter of the year, especially in the Southern European countries, balanced by a satisfactory performance in France, Germany and the U.K. In the region, sales edged up 1.1 percent to 445.1 million euros, or $618.7 million, accounting for 40.4 percent of total revenues.
“Our results were positive throughout the entire year, with Asia and America remaining on track as growth engines while Europe was more challenging due to the economic and political turmoil which impacted the region starting from the second half of 2011,” said Vedovotto. “In the year, the sales of our top licensed brands, Gucci and Dior, achieved important results in emerging markets and in mature countries, proving the brand success and strength of the product and distribution policies of the group. We were also very satisfied with the results recorded by the licenses of the Hugo Boss Group and Marc Jacobs as much as with the strong international expansion of Tommy Hilfiger.”
Vedovotto said Safilo is banking on its own Carrera brand, which performed “above expectation” in the U.S. and Latin American markets.
The company said 2012 “should see an overall positive business environment in the eyewear industry,” despite ongoing weakness in Europe, balanced by North America and especially main emerging countries. While expecting revenues and profitability to be influenced by the phaseout of the Armani Group licenses, Safilo said the latter will be balanced by the group’s new projects and licenses.
In 2011, total investments reached 31.2 million euros, or $43.3 million — mainly capital expenditures related to boosting production facilities in Italy and abroad.
Safilo narrowed its net debt, which stood at 238.3 million euros, or $331.2 million, at the end of 2011, compared with 256.2 million euros, or $338.2 million, at the end of 2010.
On Thursday, Safilo shares on the Milan Stock Exchange closed up 1.91 percent to 5.32 euros, or $6.98 at current exchange.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)