MILAN — Italian eyewear company Safilo Group on Tuesday reported a near 37 percent drop in first-quarter earnings, after the spiraling dollar bit into sales.
However, the company, which has licenses with Giorgio Armani, Dior, Gucci and Valentino, among others, confirmed its objectives for 2008.
Net profits for the three months through March 31 fell to 13.2 million euros, or $19.8 million at average exchange — results that Safilo said were "substantially in line with expectations for the first part of the year."
"We knew that the first quarter was going to be the most challenging of the year due to the difficult economic climate," Safilo chairman Vittorio Tabacchi said.
Sales slipped 4.5 percent to 326 million euros, or $488.3 million — although, at constant exchange, they grew by 0.9 percent. In North America, revenues increased 2.4 percent.
Safilo has forecast sales growth of between 4 and 5 percent this year, assuming an average euro-dollar exchange rate of 1.47. The company expects net profits to hover around 4.5 to 5 percent of sales, thanks in part to an improvement in the tax rate.
Last month, Goldman Sachs downgraded Safilo to "neutral" from "buy" after the eyewear company lost Gucci Group's Stella McCartney license to rival Luxottica and on a more cautious view of margins and a weaker dollar assumption.
The McCartney contract contributed less than 1.5 million euros, or $2.1 million at average exchange, to Safilo's total revenues in 2007. However, Goldman believes the loss "may increase market perception of the group later losing the Gucci contract," which expires in 2010 and represents around 20 percent of turnover.
In real terms, Safilo's U.S. sales in the quarter increased 14.9 percent, boosted by the "good performance" of prescription frame collections in independent channels and "the strong progress" of the retail channel, following the February acquisition of the Sunglass Island store chain in Mexico. Safilo also reported "double-digit" growth at constant exchange at the Solstice chain.
Currency fluctuations affected revenues in Asia as they dipped 3 percent, compared with a 4.5 percent gain at constant exchange. Safilo reported "good results in Chinese and Korean markets," but "persisting difficulty" in Japan.After growing 28.5 percent in the same period last year, sales in Europe fell 3.2 percent.
By channel, retail sales increased 56.9 percent, following the acquisition of Sunglass Island in Mexico and Just Spectacles in Australia. Together, the chains added 77 stores to Safilo's directly operated network, which, at the end of March totaled 268 units. Safilo also operates the Loop Vision chain in Spain and Solstice in the U.S.
Wholesale revenues decreased 7.5 percent, following a slowdown in sunglass sales, the company said.
Safilo's stock closed down 2.5 percent to 1.81 euros, or $2.80, in Milan on Tuesday.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast