Safilo sees Q1 strength in Europe, but N America is soft

By

Sandra Halliday

Published
May 5, 2023

Eyewear giant safilo has released a Q1 update and said that Europe and emerging markets continued to drive the growth of its own brands and core licenses, but “the business environment remained soft in North America”.

The headline story is that net sales rose 1.6% at current exchange rates to €287.2 million, although they fell 0.4% at constant exchange rates, while organic sales were up 3.2%.

Gross profit was up 7.9% at €167.8 million with a margin of 58.5% (vs 55% in Q1 2022) and adjusted EBITDA rose 1.3% to €32.4 million.

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Organic sales benefited from good performances at Carrera, Polaroid, Carolina Herrera and David Beckham that rose in double digits, and Hugo Boss and Tommy Hilfiger saw “good progress”.

In North America, sales fell 3.4% at current exchange rates to €124.7 million.

The US wholesale market “continued to register sustained demand for premium and high-end products”. But that “soft” business in America was especially marked in the entry and mid-tier price points” where it saw “still subdued order-taking from our customers, and in sunglasses, impacted by unfavourable weather conditions in certain key states”. 

In Europe, sales rose 3.8% to €121.6 million with organic sales up 5.5%. It saw strong growth in all the main European markets, “which allowed the group to more than offset the expected, significant decline in revenues, of almost 70%, generated through the GrandVision chain”. 

Italy, Spain, France and the group’s newest Central and Eastern European markets continued to outperform, delivering particularly strong revenue growth in independent opticians and chains. In Europe, sales of Carrera and Polaroid grew by approximately 20% and 10%, respectively. 

In the Rest of the World, net sales rose 20.3% to €28.8 million. Driving the expansion of the area was once again the group’s strong commercial development in Brazil and above all in Mexico, where Carrera, Polaroid and all the core licenses recorded double-digit increases. Sales in India and the Middle East also posted “significant” growth rates.

In Asia Pacific, net sales fell 3% to €12 million. The performance reflected the still soft business trends in the Chinese market “due to a certain prudence of wholesale customers, with a trend change expected starting from the Shanghai optical fair, the most important eyewear sector fair in Asia, in April”. But sales grew in the travel retail channels thanks to reopenings in China and the gradual recovery of tourist flows, and in Australia, where the group’s sport business kept expanding.

CEO Angelo Trocchia said the period “broadly met our expectations for the beginning of the year, reflecting the continuation of some of the main business drivers that had characterised the second half of last year. Our sales, on the whole substantially stable compared to the same period of 2022, were driven by our [own] brands and our core licenses registering again good progress in emerging countries and above all in Europe, where the various markets of the area continued to expand nicely.”