MILAN — Safilo Group SpA delivered 2021 results well above 2019 levels and returned to the black last year, thanks to a solid execution of its business transformation and a rebalancing of its brands.
A strong performance of its proprietary brands and of its prescription frames, as well as a jump in sales in the U.S. and on its online channel all contributed to the Italian eyewear manufacturer’s progress in the year.
Smith’s goggles and helmets business soared, while sales of sunglasses, although turning positive in the second half, did not fully recover due to the challenging business environment. Prescription frames accounted for 40.4 percent of the total business, up from 37.8 percent in 2019.
In the 12 months ended Dec. 31, Safilo reported a net adjusted profit, excluding nonrecurring costs, of 27.4 million euros compared to the adjusted net loss of 50.1 million euros in 2020. In 2019, the adjusted net loss amounted to 6.5 million euros.
Sales in 2021 reached 969.6 million euros, up 26.3 at constant exchange rates compared to 780.3 million euros recorded in 2020. Compared to 2019, sales rose 7.5 percent.
During a conference call with analysts on Tuesday at the end of trading, chief executive officer Angelo Trocchia said that “Twenty-twenty-one was a record year for Smith, which became the biggest brand in our portfolio. The significant development of its online channel, enhanced at the beginning of the year with the launch of a new e-commerce site, together with the growth in Blenders online confirmed the strength of our digital transformation strategy.” Safilo’s online business now accounts for 13.4 percent of sales, up from 12.7 percent in 2020 and from 3.9 percent in 2019.
The first two months of the year were also “really good,” said Trocchia, with optical maintaining the growth pace of last year and the sun category showing the first positive signs, “even though the season has not started yet.”
Trocchia touted the signing of the three new licensed brands — Dsquared2, Carolina Herrera and Chiara Ferragni Collection — the latter helping to reach out to a younger customer.
In early 2022, business grew in all the main geographies and product categories “confirming a constant currency high-single-digit growth trend,” said the executive, who admitted the environment is still influenced by the COVID-19 pandemic, and more recently by the conflict in Ukraine.” Our thoughts are with the affected population in these difficult hours, while we carefully monitor the impacts to our business,” said Trocchia.
Chief financial officer Gerd Graehsler said sales in Russia and Ukraine account for less than 2 percent of the group’s total revenues.
He also cited global “inflation headaches” and high costs of shipments. That said, “we managed reasonably well,” he underscored, “taking pricing interventions which did not have a negative impact on demand.”
Trocchia defined 2021 “a year of transition,” saying that in 2022 Safilo will remain focused on strengthening its business model, confident in a new phase of development for the group.
Graehsler said Europe showed “a strong performance in the first quarter, and the U.S. continues to grow, while Asia is patchy,” given the new clusters of COVID-19 in China and Hong Kong, but progress is seen in Australia.
In the 12 months ended Dec. 31, adjusted earnings before interest, taxes, depreciation and amortization, excluding non-recurring items, amounted to 84.9 million euros, up 29.7 percent on 2019.
Adjusted operating profit amounted to 32.9 million euros compared to an adjusted operating loss of 57.9 million euros in 2020, and up exponentially compared to an adjusted operating profit of 3.2 million euros recorded in 2019.
Organic sales represented the main growth driver compared to the pre-pandemic business levels, up 10.5 percent at constant exchange rates, thanks to the strong development recorded by the group’s main brands, from Smith and Carrera to Kate Spade, Tommy Hilfiger and Hugo Boss.
The acquisitions of Privé Revaux and Blenders and the launch of the new licenses of David Beckham, Missoni, Levi’s, Isabel Marant, Ports and Under Armour, enabled Safilo to effectively compensate the business decline deriving from licenses terminated at the end of 2020 and at the end of June 2021, including Dior and Fendi.
Trocchia said this was “an extraordinary year for Smith,” and cited a “strong recovery for Carrera and new omnichannel strategy in the U.S.” He said Smith “has huge opportunities, moving away from too much snow into biking.”
Graehsler pointed to a double-digit growth for key licenses Kate Spade, Hugo Boss, Jimmy Choo and Tommy Hilfiger.
The U.S. market was the main driver for the group compared to the previous year and versus 2019, with the organic business exceeding pre-pandemic business levels also in Europe and in most of the emerging markets.
At constant exchange rates, in 2021, sales in North America amounted to 466.2 million euros, up 40.5 percent on 2020 and they were up 47 percent compared with 2019, thanks to the strong growth in the organic business, up 15.9 percent, the acquisitions of Blenders and Privé Revaux and the new licenses.
Sales in Europe amounted to 378.5 million euros, up 14.6 percent on 2020, and down 14.9 percent compared to 2019.
Sales in Asia Pacific amounted to 52.6 million euros, down 14.2 percent compared to 2020 and down 32.1 percent on 2019, with the entire year strongly affected by the impact of the terminated licenses.
In Asia Pacific, despite the persistence of the pandemic and of the related lockdowns in many markets, organic sales almost completely recovered pre-pandemic business levels, down 3 percent compared to 2019, thanks to the group’s business in China almost doubling and Australia growing double-digit compared to 2019.
Sales in the Rest of the World amounted to 72.4 million euros, up 57.8 percent compared to 2020 and above 2019 business levels by 6.5 percent. The latter performance was driven by an 18.5 percent organic sales growth, with Brazil and Mexico as the key contributors, and progress was seen in the Middle East.
Asked about Kering Eyewear’s acquisition of Maui Jim a day earlier, Trocchia said it was “a great brand,” implying he had looked at its dossier, but vaguely mentioned a lack of official figures and the many “opportunities from a financial perspective.”
As of Dec. 31, net debt stood at 94 million euros, down sharply compared to 222.1 million euros at the end of December 2020 thanks to the net proceeds, equal to 133.1 million euros, deriving from the capital increase completed last November.