MILAN — Safilo Group SpA on Monday said profits in 2015 plummeted 84.4 percent as sales in Asia and Latin America slid and the group invested in its supply chain, reinvention, innovation and its IT transformation. Safilo said it will not propose the payment of a dividend at the next annual meeting.
In a statement after the close of trading in Milan, where Safilo is listed, the company said that net profit, adjusted for non-recurring items and restructuring costs, fell to 6.9 million euros, or $7.58 million, from 44.5 million euros, or $59.2 million, reported in 2014.
Including non-recurring charges, which Safilo said are related to an investigation by the French Competition Authority, restructuring costs and goodwill charges, the net loss for 2015 totaled 52.7 million euros, or $58.4 million.
“The year saw capex investments of 47.9 million euros [$53.2 million] and encouraging progress in the transformation of the business through the rebalancing of the group’s brand strategy, development of its go-to-market strategy, supply network, reinvention and IT transformation,” said chief executive officer Luisa Delgado.
Last year was the first year of the company’s “2020 Strategic Plan” aimed at boosting the number of brands it owns, as well as those it manufactures under license. Safilo is also committed to upgrading its technology in order to be able to produce 70 percent of its products in its facilities in Italy, China, the U.S. and Slovenia by 2020.
Safilo confirmed preliminary sales figures released Feb. 1, reporting almost-flat revenues in 2015 at constant exchange rates, with overall sales of 1.28 billion euros, or $1.40 billion, “in line” with 2014’s 1.18 billion euros.
Dollar amounts have been converted at average exchange for the periods to which they refer.
Geographically, Safilo’s Asia sales fell 9.4 percent to 154.8 million euros, or $169.3 million, as China, Hong Kong and South Korea were hit by the “challenging market environment,” the company said.
Sales in Latin America fell 6.7 percent to 51.3 million euros, or $56.1 million, as the Brazilian market weakened.
Europe was a “main driver of growth” last year, with revenues increasing 6.3 percent to 508.6 million euros, or $556.3 million. In North America, sales rose 19.4 percent to 531.3 million euros, or $581.1 million.
In terms of brands, Carrera’s sales performance in Europe was soft in 2015, while Kate Spade, which became Safilo’s second largest brand in North America after Smith, delivered low single-digit sales growth last year.
Safilo — which produces prescription and sunglass frames for licensed brands including Banana Republic, Dior and Marc Jacobs, as well as for own brands including Carrera and Polaroid — said 2016 will still be affected by its Gucci license agreement, now in its final year. Once the license expires, Gucci eyewear will be made by parent group Kering, which created a new eyewear division to manufacture and distribute the collections of its stable of brands.
“From a brand standpoint, licensed brands and owned core brands are both expected to contribute to growth, bolstered by the new partnerships with Givenchy and Swatch,” Safilo said.