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Safilo says profitability rises in 2013

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Reuters
Published
today Mar 6, 2014
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Italian eyewear company Safilo said on Wednesday profitability rose in 2013 and pledged to focus on developing its proprietary and licensed brands, taking advantage of growing demand for fashionable eyewear.

Carrera is a Safilo brand | Source: Carrera

The maker and distributer of Gucci- and Dior-branded eyewear said its adjusted core earnings rose 5.8 percent, leading to a margin of 10.9 percent in 2013.

The loss of a valuable license to make eyewear for Armani to market leader Luxottica at the end of 2012 had prompted Safilo to trim its sales and profitability expectations.

"This was the first year post-Armani so it was a transition year for Safilo, but I am pleased to see underlying profitability is improving," said Berenberg analyst Bassel Choughari.

Safilo, which makes around 80 percent of revenue from eyewear made under license, said on Wednesday it would develop the brands it owns, like Carrera and Polaroid, and selectively agree new licenses.

"Our focus is on leveraging and expanding our proprietary brands to their fullest potential," Luisa Delgado, who took the position of CEO last October, said on a conference call.

New licenses must "complement our portfolio ... we are not looking indiscriminately at just adding brands," said Delgado.

Chief financial officer Vincenzo Giannelli said a new license to make sunglasses for Kering's Fendi should generate 40-50 million euros ($54.96 million-$68.7 million) in 2014 and 2015.

Luxottica expects the Armani license to be worth 160 million euros in sales in 2014.

Analysts say changes in consumer behavior worldwide, including growing popularity of sunglasses in China, have made eyewear a lucrative market.

"There is an increasing appetite for more expensive sunglasses and the trend is set to continue," said Choughari.

Safilo posted full-year adjusted net profit of 39 million euros on Wednesday, excluding one-off costs including an Italian tax provision. Prior to the adjustment, group net profit came in at 15.5 million euros for the full year.

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