MILAN — Italian eyewear maker Safilo SpA on Monday reported a third-quarter net loss of 4.7 million euros, or $6.8 million, compared with a loss 400,000 euros, or $507,920, a year ago, following a negative accounting adjustment as the euro slid against the dollar in the period.
This story first appeared in the November 8, 2011 issue of WWD. Subscribe Today.
Net sales dropped 3.2 percent in the quarter, to 230.2 million euros, or $326 million, also impacted by currency issues and the sale of the group’s retail chain in Mexico, which took place at the end of 2010.
However, the company said that at a constant structure and exchange rate, net sales in the period would have increased 4.1 percent.
In the third quarter Safilo said it registered “a positive top-line growth on the back of the significant progress of the fast-growing markets in all the group’s main product categories as well as the good performance of the American market.”
Exchange rate fluctuations aside, Safilo — which produces and retails prescription glasses and sunglasses for brands like Armani, Marc Jacobs, Tommy Hilfiger and Gucci — continued along a positive trajectory.
In the quarter, earnings before interest and taxes increased by 5.8 percent on the year-ago period, to 8.2 million euros, or $11.9 million, reaching 3.5 percent of sales, up from 3.2 percent of sales a year earlier. Operating profit was boosted by, among others, continued improvements in the group’s U.S.-based Solstice retail unit, which confirmed “the positive trend on sales as well as the more efficient presence in the market.” Sales at Solstice were up 7.5 percent in the year-ago period on a like-for-like basis.
Dollar amounts have been converted at average exchange for the periods to which they refer.
In terms of business units, Safilo said the core wholesale business reported revenues of 211.6 million euros, or $306.1 million, in the third quarter, a 1.4 percent decline, while sales at the retail business contracted by 19.8 percent to 18.6 million euros, or $26.9 million, following divestitures.
In geographic terms, sales in the U.S. dropped slightly due to currency issues, to 110.6 million euros, or $160 million; at constant currencies, performance “remained satisfactory,” with sales up 7.4 percent and “with positive trends in all main product categories.” Asia remained the fastest growing market in the third quarter, posting a 10.7 percent increase in sales (up 17.9 percent at constant currencies), while Europe “remained subdued,” with sales down 4.8 percent on the year-earlier period.
The company — which on Sept. 29 presented a new five-year industrial plan — didn’t issue any update on talks over the renewal of the Armani Group license, due to expire in 2012. Safilo currently produces eyewear branded A|X Armani Exchange, Emporio Armani and Giorgio Armani, and analysts have estimated that the license generates up to 150 million euros, or $204 million at current exchange, in annual sales.