MILAN — Safilo Group SpA fell nearly 30 percent on the Milan Bourse Monday, after Deutsche Bank and Citi downgraded the stock to “sell” from “hold,” following a profit warning and the reappointment of the Italian eyewear firm’s former chief executive officer.
Safilo’s share price sank to 0.55 euros, or 69 cents,less than a quarter of its value 12 months ago.
On Friday, the company, which has licenses with Giorgio Armani, Dior, Gucci and Valentino, among others, revised down its 2008 revenue and margin forecasts for the second straight quarter — predicting a 2 percent drop in revenues from 4 percent growth and a net income target of 1 percent of sales, from 3 to 3.5 percent — following a 63 percent decline in earnings in the first nine months of this year.
For the third quarter ending Sept. 30, Safilo reported a net loss of 6.7 million euros, or $10.1 million, compared with net profits of 5.4 million euros, or $7.4 million, during the same period last year, prompting Deutsche Bank analyst Francesca Di Pasquantonio to ask, “How bad can it get?”
Sales fell 3.1 percent to 228.7 million euros, or $314.3 million. Dollar figures were converted at average exchange rates.
Safilo said it had renegotiated its debt covenants — allowing for a net debt over earnings, before interest, taxes, depreciation and amortization ratio of 4.85 times, from 3.5, until June 2009 — although Deutsche Bank and Citi said the eyewear company risked breaching these again next year, as conditions worsened. (The average net debt/EBITDA ratio for listed luxury companies in Europe is less than 1.)
On Friday, Safilo reappointed former ceo Roberto Vedovotto — replacing Massimiliano Tabacchi — reasoning Vedovotto’s knowledge and experience would help the company achieve its strategic goals and create value in the medium term. However, Di Pasquantonio said the decision, which also saw Tabacchi move up to executive vice chairman, “further compromises the company’s credibility.”
Citi analyst Alberto Checchinato cautioned: “Despite the benefit of [Vedovotto’s] experience and detailed knowledge, we believe [as] some investors that fresh management with a strong track record in business turnaround could have been preferable to meet current challenges.”
Vedovotto reprises the role he held between 2002 and 2006, following a two-year stint at the now-defunct Lehman Brothers Holdings Inc. His priority will be to find a solution to Safilo’s net indebtedness, which Deutsche Bank forecast could reach 580 million euros, or $731.2 million, at yearend, or 4.6 times EBITDA.
Di Pasquantonio said despite the company renewing its lucrative contract with Gucci last week, “the challenging environment will continue to put more pressure on the already vulnerable balance sheet, while operating profits continue to be eaten up by interest charges.”
“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
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye