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.”
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
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