In the first two months of 2020, Safilo, which produces and distributes eyewear for brands including Marc Jacobs, Jimmy Choo and Moschino, recorded a positive mid-single-digit increase in sales. This was expected to flatten by the end of the first quarter, based on the preliminary data and information collected in early March, after the outbreak of the COVID-19 escalated in Italy. Once the coronavirus spread across Europe and the U.S., it dented Safilo’s “economic activity, resulting in negative effects for the group’s sales and earnings performance, which are today impossible to predict for the full year.”
As a consequence, the 2020 outlook provided by Safilo last December in the context of the release of its Group Business Plan 2020-24, is no longer valid and, based on preliminary data, the company’s sales are now expected to decline by 11 to 13 percent at constant exchange rates compared to the same quarter last year. The information was released at the end of trading on Monday in Milan, where Safilo is publicly listed.
Last month, Safilo reiterated its 2020 guidance of full-year net revenues in the range of 960 million to 1.0 billion euros and an adjusted EBITDA margin of some 6 percent of sales. While the figures include the impact of the Blenders acquisition (announced on Dec. 8), they did not include the effects of the purchase of Privé Revaux, which was signed on Feb. 10. These estimates also did not include the impact of the coronavirus spread.
The group also said it had “adopted all necessary measures to protect staff health and business continuity, including measures related to hygiene in all its facilities, remote working solutions for office staff and is actively working on continuity of supply chain operations.”
Safilo stated that until today it had not been “significantly impacted on the supply side as sufficient stock levels at the end of 2019 granted the group the flexibility to face the temporary shutdown of its Chinese plant in Suzhou and the difficulties encountered by Chinese suppliers during January and February. Since then, the Chinese plant has reopened and is working at almost full capacity, while most of the key Chinese suppliers are also back to normal activity levels.”
Safilo’s management “has designed a mitigating action plan, focusing on minimizing discretionary expenditures and Capex, adjusting plans to the new consumption scenario and implementing an effective working capital and cash protection management.”
Despite the uncertainties, Safilo “remains committed to continue pursuing the key strategies” outlined in its 2020-24 business plan.
These included growth through a customer-centric business model, powered by a digital transformation strategy, “preserving and enhancing our undisputed leadership in design, product development and innovation, our global commercial footprint and our strong know-how in brand management to continue pursuing a high-potential multisegment brand portfolio strategy,” chief executive officer Angelo Trocchia said at the time.
As reported, in 2019 the Padua, Italy-based firm recorded a net loss of 4.0 million euros — compared to a 14 million euro net loss a year earlier — while net sales inched up 3.1 percent to 939 million euros.
In March, commenting year-end figures, Trocchia pointed to the success of Safilo’s own collections — Carrera, Polaroid and Smith — as drivers of continued portfolio growth. He also touted the recently launched licensed collections David Beckham, Levi’s and Missoni, and expressed confidence in the Tommy Hilfiger line.