MILAN — Italy’s two largest eyewear firms saw profits fall in the first quarter as a result of the economic downturn.
This story first appeared in the May 8, 2009 issue of WWD. Subscribe Today.
Luxottica Group SpA reported a 22.5 percent drop in first-quarter net profit to 80.4 million euros, or $104.5 million at average exchange. Revenues at the company — which has licenses with Chanel, Dolce & Gabbana, Prada and Versace, among others — fell 6.2 percent to 1.32 billion euros, or $1.72 billion.
Meanwhile, Safilo Group SpA reported net profits fell 87 percent to 1.7 million euros, or $2.2 million, in the quarter. Currency conversions were made at average exchange rates for the period. Revenues at the firm — which produces collections for brands such as Giorgio Armani, Gucci and Dior — dropped 11.7 percent to 287.9 million euros, or $374.2 million, but at constant exchange rates, sales dropped 14.9 percent.
Luxottica said the period “was particularly challenging” for the eyewear market due to a drop in demand caused by “consumer attitudes, rapid reduction in inventories by clients in all geographical areas and the slowdown in the global economy.” That said, the company is already seeing “some positive signals.”
“After the first four months of 2009, we are already seeing a clear difference between the January to February and March to April periods,” said chief executive officer Andrea Guerra. “In fact, in March and April our results have stabilized in North America, while improving in nearly all other markets. April ended with sales results ahead of last year.” Consolidated sales year-to-date edged down only 3 percent compared to the same period last year, noted Guerra.
Safilo chief executive officer Roberto Vedovotto agreed the first quarter was hard but that things have improved since. “We have, however, seen encouraging results in the areas of the business on which we are focusing,” pointing to the company-owned Carrera brand, which showed resilience, especially in the Italian market, with double-digit growth. Vedovotto also noted a “renewed focus of the high-end collections of the main luxury brands, through a broader product mix able to reach a wider consumer base,” resulting in positive feedback in the U.S. and some countries in Europe.
Last month, Vedovotto said talks between Safilo’s majority shareholder Only 3T SpA and four private equity funds were ongoing, and a deal to sell a stake in the eyewear firm could be reached before the summer.