MILAN – Shares of Safilo Group climbed 4.77 percent to 1.03 euros one hour after the bourse opened here, following the signing of an agreement to sell its U.S. retail chain Solstice to Fairway LLC.
Fairway is a U.S. limited liability company, formed by a group of investors active in the U.S. and in the European eyewear retail business.
At the request of Italy’s Stock Exchange watchdog CONSOB, Safilo revealed that the deal, for a consideration of $9 million on a cash and debt free basis, also includes a multi-year supply agreement for Safilo products. In the fiscal year ended Dec. 31, the Solstice retail business reported sales of 52.1 million euros, down 16.5 percent at constant exchange rates compared to 2017, and an operating loss of 13.5 million euros. The transaction is expected to result in a disposal loss estimated in approximately 18 million euros.
Safilo said last month it had received expressions of interest to purchase Solstice, and that it considered the sale probable within 2019. The option to sell, said Safilo at the time, fit with its efforts to turn around the company.
To wit, the sale of the Solstice retail business is in line with Safilo’s focus on its core wholesale business. It “thereby marks a further key step in Safilo’s strategy of recovering a sustainable economic profile,” said the company on Friday.
Separately, earlier this week, the Italian eyewear company said it had reimbursed Equity Linked Bonds the amount of 150 million euros, completing the refinancing plan set in motion last year and totaling 300 million euros between the share capital increase and the New Credit Agreement expiring in 2023.
Earlier this month, Safilo and David Beckham announced a global, 10-year licensing agreement for the production and distribution of sunglasses and prescription glasses under the soccer champ’s moniker. The first collection will launch in January 2020.
Last year, the company renewed important licenses with brands such as Banana Republic, Fossil, Havaianas and Tommy Hilfiger. In addition, it signed an agreement with Missoni and, most recently, with Levi’s, which is seen to fuel the contemporary segment and tap into the Millennial group.
As reported, Safilo saw encouraging first-quarter net sales, which increased 3.4 percent to 247.3 million euros compared with 239.1 million euros in the same period last year.
Safilo cut its loss in 2018, and the company’s management expects to return to profitability in 2020.
In the 12 months ended Dec. 31, adjusted net losses totaled 26.7 million euros, compared with an adjusted net loss of 47.1 million euros in 2017.
In 2018 revenues came to 962.9 million euros, down 7 percent, compared with 1.03 billion euros in 2017. At constant exchange, sales decreased 4 percent.