MILAN — Two days after the U.S. election, the topic was naturally on the plate as Safilo Group’s management discussed the performance of the Italian eyewear company in the first nine months of the year.
The end of the Jimmy Choo license, announced last year, and a soft trend in North America and Asia in the third quarter hurt sales during the nine-month period. However, Europe proved to be more resilient, despite the slowdown of the sunglasses business, said chief executive officer Angelo Trocchia during a call with analysts on Thursday. Excluding the Jimmy Choo exit, the sales performance was substantially stable.
Safilo closed the first nine months of 2024 with sales down 3.5 percent to 757.4 million euros from 785.1 million euros a year earlier. At constant exchange rates, revenues were off 2.7 percent.
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In the third quarter, sales decreased 4.1 percent to 225.4 million euros, compared with 235 million euros in the same period last year. At constant exchange rates, sales were down 3.4 percent.
Adjusted earnings before interest, taxes, depreciation and amortization amounted to 75.4 million euros and were stable compared with a year earlier.
“In such a complex market environment, it has been crucial to continue focusing on our long-term priorities, consolidating our path of economic and financial improvement,” said Trocchia. “We are particularly pleased to have confirmed also in this quarter the growth of our gross margin, and to have improved our operating performance. We also achieved another period of financial efficiency, thanks to a good cash generation.”
In the third quarter, the gross margin improved by 140 basis points to 59.1 percent of sales from the adjusted level of 57.7 percent a year earlier.
After a soft performance in May and June, third-quarter sales were marked by a modest sun season in July and August, followed by a more promising start to the fall/winter order collection in September and a positive October in all Safilo’s markets, said Trocchia, flanked by chief financial officer Michele Melotti.
Performance of Brands and Geographies
Carrera, David Beckham, Tommy Hilfiger and Marc Jacobs were singled out as the brands growing the most, while Polaroid and others were influenced by a higher exposure to sun products. In the sport segment, Smith’s performance remained affected by a still-cautious market environment.
In the first nine months of 2024, sales in North America fell 5.8 percent to 321.4 million euros. The wholesale business was positive, while the sports channels were still subdued, and the direct-to-consumer channel decelerated at the end of the quarter.
“Closer to the elections, Americans were more nervous, in a wait-and-see mood,” said Trocchia. “Was this related to the uncertainty? We will see in the next three weeks, which will be crucial, starting from yesterday. Despite the strong volatility and complex context, October was a positive month. Black Friday will tell us about the mood of the consumer in the U.S.”
Sales in Europe edged up 1 percent to 324.2 million euros, and the Continent was reported as the group’s most resilient market, particularly France, where the business with independent opticians and chains maintained good growth rates. The third quarter was also positive in Germany and in Eastern European markets. The prescription frames business in independent optician stores and chains was solid, while trends in sunglasses were lackluster.
In the nine months, sales in Asia Pacific fell 8.7 percent to 40 million euros, impacted by the slowdown in China in the third quarter. However, the feedback on the new collections, gathered at the optical fair held in Beijing in the second week of September, proved to be promising, said Trocchia.
Asked to comment on China, the executive said it was too early. “We need to really understand the political choices.” Melotti added that “80 percent of our supply for North America is China-based but the impact is not material, based on our past experience.”
Sales in the Rest of the World area dropped 9.3 percent to 71.8 million euros, dented by soft business in July and August, especially in Latin America, while September registered a good recovery, particularly in India, the Middle Eastern and African markets.
Smartglasses
Responding to a question about smartglasses, following Carrera’s partnership with Amazon last year, Trocchia said that the initiative “was not intended as a game changer; the main aim was to learn about consumer behavior and channels limited to specific areas. I think there is a great opportunity to become bigger and any activity is well-received by us; it’s an area we are looking at and working on because it’s a great opportunity to catch, but I can’t say when and how.”
As of Sept. 30, net debt stood at 96.1 million euros compared with 100.4 million euros at the end of June, and included the acquisition of the perpetual license of David Beckham revealed in May, and the share purchase program launched on July 1.
