MILAN — Safilo Group SpA’s third-quarter sales dropped 9 percent to 221.5 million euros compared with 243.4 million euros in the same period last year, dented by soft business in North America and Europe and a negative performance in emerging markets, also due to a challenging comparison base.
On the other hand, the group progressed on the cost-saving initiatives, with higher efficiencies at the industrial level and of the ongoing savings in overhead expenses which helped to counterbalance a negative operating leverage and impact from foreign exchanges.
In the first nine months of 2018, sales were down 9.7 percent to 713.7 million euros compared with 790.5 million euros in the same period last year.
Excluding 4.4 million euros of non-recurring costs, adjusted earnings before interest, taxes, depreciation and amortization in the third quarter totaled 12 million euros, down 21.7 percent compared with 15.4 million euros in the same period last year.
In the nine months, adjusted EBITDA was down 13.9 percent to 37.2 million euros, compared with 43.2 million euros last year.
“In the third quarter, we accelerated the important work on the fundamentals on which we aim to build our new 2020 business plan,” said chief executive officer Angelo Trocchia. “In Europe and North America, where we aim to reconquer the business, we are progressing in stepping up core capabilities in the areas of customer care and service levels, and we are seeing an improvement in the business performance trends since beginning of September. The work is also ongoing in Asia and Latin America, where in each of the regions we recently appointed new, seasoned leaders with industry experience, who will help us to develop a more effective operating model in important markets like Brazil, China and Japan.”
In October, Safilo appointed Connie Lai Sin Ching as senior commercial head of APAC & Greater China. As reported, David Anabitarte joined the company as the firm’s Latin America vice president in October, succeeding Andrea Busato, taking up the role on Oct. 1 and based in Mexico City.
In the first nine months of 2018 sales in Europe decreased 8 percent to 331.6 million euro and revenues in North America dropped 13.8 percent to 280.3 million euros. In that region, wholesale revenues at constant exchange rates were down 6.5 percent in the first nine months, after reporting a decline of 5.6 percent in the third quarter, a slight improvement compared to the performance recorded in the first half of the year. Retail sales at the Solstice stores in the U.S. totaled 39.9 million euros in the first nine months and 13.4 million euros in the third quarter, posting a decline at constant exchange rates, of 14.3 percent and 19.4 percent, respectively. Safilo closed 22 Solstice stores in the last 12 months, taking the network to a total of 81 stores at the end of September 2018.
In the nine months, sales in Asia-Pacific rose 5 percent to 47.9 million euros. At constant exchange, they were up 10.8 percent.
Sales in the Rest of the World area decreased 8.9 percent to 53.9 million euros.
Earlier this week, Safilo’s extraordinary shareholders’ meeting approved the share capital increase up to a maximum of 150 million euros.
As of Sept. 30, net debt stood at 144.2 million euros, including the third and last compensation payment of 30 million euros received from Kering at the end of September, following the end of the Gucci license. This compares with a net debt of 135.9 million euros at the end of September 2017.