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.
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
“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