MILAN — Sales at Safilo Group SpA in the first quarter of the year were hurt by brands whose licenses were or will be phased out, a negative impact only partly compensated by positive trends in the portfolio of brands going forward.
Among those on their way out, Safilo’s license for Gucci is coming to a close in December, two years earlier than originally foreseen, as Kering prepares to internalize control over all of its eyewear.
Safilo did not disclose what portion of its sales could be attributed to Kering brands, but prior to the formation of Kering Eyewear, Saint Laurent, Bottega Veneta, Alexander McQueen and McQ brands also had licensing pacts with Safilo.
Safilo net sales saw a 7 percent decrease at current exchange rates and 6.6 percent decrease at constant exchange rates compared to the first quarter of 2015. In the first three months of 2016, net sales reached 301.6 million euros, or $343 million at current exchange.
The Asia-Pacific area took the brunt of the negative trend, as net sales in the region sank 28.7 percent in the first quarter compared to the same period last year. From January through March 31, they totaled 26.7 million euros, or $30.4 million.
Meanwhile, the company’s core North American and European markets fared far better. European net sales totaled 130.1 million euros, or $147.9 million, a decrease of 2.8 percent over the first quarter of 2015. Net sales in North America were 127.2 million euros, or $144.6 million, in the first quarter, a slide of 5.7 percent.
Safilo underlined that for the portfolio of brands going forward, net sales rose 3.6 percent and 0.8 percent in Europe and North America, respectively, in the first three months over the same period last year. But in the Asia-Pacific area, net sales for brands going forward fell 14.6 percent.
Earnings before interest, taxes, depreciation and amortization were 19.8 million euros, or $22.5 million, marking a 36.8 percent decrease over the first quarter of 2015. Meanwhile gross profit dropped 6.3 percent to 184.2 million euros, or $209.5 million, over the same period.
On the bright side, Safilo Group’s net debt fell 14.5 percent over last year’s first quarter. On March 31, it stood at 109.7 million euros, or $124.7 million.
Safilo Group did not release net profits in its trading update. As of March 18, listed Italian companies are no longer obliged to issue interim results, thanks to an Italian decree made in accordance with the European Union’s Transparency Directive.
Brands under license with Safilo include Gucci, Fendi, Dior, Jimmy Choo, Marc Jacobs, Kate Spade and Saks Fifth Avenue, while the group’s proprietary brands include Carrera, Polaroid and Safilo.