Safilo Group’s online business and strong performance of its prescription glasses, sports products and key markets, including the U.S., allowed the company to offset losses in Asia and the exit of key licenses in the third quarter.
In the period ended Sept. 30, Safilo reported adjusted earnings before interest, taxes, depreciation and amortization of 19.1 million euros, up 33.3 percent from 14.3 million euros in the same quarter of 2020. Thanks to the progress recorded in the third quarter, Safilo managed to achieve an adjusted EBITDA of 68.8 million euros in the first nine months of the year, versus a negative adjusted EBITDA of 13.9 million euros in the same period of 2020.
During a Tuesday evening conference call after the Milan Bourse market close, the company’s chief executive officer Angelo Trocchia confirmed estimates announced in the first half of the year, as it prepares for inflation, a rise in transportation costs and delays. Safilo sees 2021 net sales rising mid-single digits at constant exchange compared to 2019 and expects its full year 2021 adjusted EBITDA to surpass 2019 levels.
“Positive trends in our key markets and product categories allowed us to close another strong quarter of recovery and growth, despite the dampening effect of a still complex environment in a number of countries and our challenging comparison bases in the midst of our brand portfolio overhaul,” Trocchia said, adding that Safilo is working with its Chinese suppliers to diversify Safilo’s sourcing footprint in Asia to include geographies beyond China. It will also continue with its savings program and price adjustment strategy, amid uncertain times.
Safilo will also continue to eye new acquisitions and focus on its digital transformation, which includes the new licensing and distribution agreement it inked in September with Chiara Ferragni’s signature label. “In the third quarter, our strategic priority to expand the reach of our brand portfolio to new consumer generations into the digital universe, which we continue to invest in, was further advanced thanks to the new licensing agreement we signed with Chiara Ferragni,” Trocchia said.
The exit of the Dior, Max Mara and Fendi licenses, as well as Givenchy by the end of this year, prompted Safilo to redefine its portfolio.
In addition to its own brands, Carrera, Polaroid, Smith and Safilo, Blenders and Privé Revaux, the group produces and distributes eyewear for labels such as DB Eyewear by David Beckham, Missoni, Marc Jacobs, Moschino, Tommy Hilfiger, Levi’s and Parisian-chic label Isabel Marant. It most recently added Carolina Herrera, Dsquared2 and Under Armour to its portfolio.
In the third quarter, sales rose 3.5 percent to 226.6 million euros compared with 219.1 million euros in the year-ago period. At constant exchange, they rose 2.6 percent, helped by the performance of Safilo’s online sales that equaled 13 percent of sales overall, compared to only 3 percent in the third quarter of 2019, on robust results from Blenders online business and Smith’s direct-to-consumer channel.
Geographically, sales in North America, which represented 50.8 percent of revenues in the third quarter, inched up 1.8 percent to 115.1 million euros compared to the same period in 2020, but surged 44 percent compared to the third quarter of 2019. Europe improved, up 4.5 percent to 82.8 million euros but still remained 13.3 percent lower than the pre-pandemic third quarter of 2019.
Sales in Asia Pacific were down 28.9 percent to 11.3 million euros, impacted by the loss of key licenses and COVID-19-related lockdowns and restrictions in Australia and most Asian markets, with the exception of China which remained “very positive.” The Rest of the World category, which represents just 7.7 percent of Safilo’s global sales, rocketed 60.4 percent to 17.4 million euros.
In the first nine months of 2021, Safilo reported a 32.9 percent rise in sales to 737.4 million euros compared with 554.7 million euros in the first nine months of 2020 and 708.7 million euros in the same period of 2019.
Looking ahead, as the company works to achieve its targets, Safilo’s chief financial officer Gerd Graehsler said the company will “continue to invest in its growing e-commerce strategy and the market share Safilo has most recently conquered.”