MILAN — A recovery in the U.S. market and Asia, excluding Japan, helped Safilo post first-quarter earnings and sales that almost matched the same period last year.
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For the three months ending March 31, the Italian eyewear company reported net profits of 1.7 million euros, or $ 2.3 million, inching down 0.3 percent from last year.
Sales slipped 0.7 percent to 286 million euros, or $394.6 million, from 287.9 million euros, or $374.2 million, in the same period last year.
Dollar amounts have been converted at average exchange for the periods to which they refer.
Safilo produces for designer brands including Giorgio Armani, Dior, Gucci, Valentino, Tommy Hilfiger and Yves Saint Laurent.
Chief executive officer Roberto Vedovotto said this year “has started with some signs of recovery in markets like the United States and Asia, whereas conditions are still challenging in Europe.” Despite the ongoing “uncertain and volatile business and macroeconomic environment,” he said Safilo “made some progress as far as its business and financial performance are concerned.”
Operating profit (EBIT) in the first quarter totaled 24.1 million euros, or $33.2 million, up 26.2 percent from the same period the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 14.6 percent to 34.6 million euros, or $47.7 million.
Sales in the U.S. grew 1.6 percent to 111.8 million euros, or $154.2 million, improving upon the uptick in the last quarter of 2009, and accounting for 44.8 percent of revenues in the period. The company said it benefited from a “very strong position among independent opticians, but above all from the good result of sales of sunglasses at the main department stores.”
Safilo’s Solstice stores showed a 20 percent gain compared with the same period the previous year.
Europe posted a 2.7 percent slide in sales to 128.2 million euros, or $176.9 million, partly because of reduced demand in central Europe.
Driven by China, Hong Kong, and India, revenues in Asia grew 10.5 percent, accounting for 14.3 percent of sales, with improvements in all the main markets of the region with the exception of Japan.
Safilo’s company brand Carrera showed 25 percent growth in the quarter.
As of March 31, the company almost halved its net debt, which stood at 315.4 million euros, or $435.2 million, compared with 617.7 million euros, or $803 million, at the end of March 2009. The eyewear manufacturer escaped bankruptcy last year by signing an agreement with its new main shareholder, Amsterdam-based retailer HAL Holding NV, to initiate a long-term recapitalization plan.
“We remain focused on continuing to improve our overall performance during the year following the completion of the recapitalization plan during the first quarter that has allowed us to have a better capital structure now,” Vedovotto said.
Pointing to the volatility of the economy, the company said it “remains cautious and focused on continuing its route of recovery during the year.”
In a separate statement on Friday, Safilo said it expected to renew its branded licensing agreements, which expire next year and account for 23 percent of the company’s sales.
Safilo said it has initiated negotiations to renew the contracts. Exceptions are the Marc Jacobs and Marc by Marc Jacobs licenses, which were renewed in April until 2015.
Referring to the first four licensed brands in terms of sales, Giorgio Armani, Emporio Armani, Gucci and Dior, which accounted for 45 percent of consolidated sales of the group at the end of December, the group said it was “probable” those licenses would be renewed within the year.