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Safilo’s Full-year Net Profit Plummets

MILAN — Safilo Group‘s adjusted net profit plunged 76 percent to 14 million euros in 2023, as the company was hit by higher charges due to rising interest rates. In a statement released Thursday, the company said net financial charges increased to 19.2 million euros in 2023 from 15.5 million euros in 2022.

The group also paid 5.9 million euros for its non-minority interest in Blenders, for which it exercised the first option for an additional 10 percent of non-controlling interests in the third quarter of the year.

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The adjusted economic results exclude non-recurring costs related to the disposal of the Longarone plant; to other restructuring costs; to the termination of activities related to exiting licensed brands, and to a partial write-down of some intangible assets related to a previous acquisition, Safilo said.

Safilo in October finalized the sale of its storied manufacturing complex in the Veneto region, one of the country’s key eyewear manufacturing districts, to Thélios, the LVMH Moët Hennessy Louis Vuitton-owned eyewear manufacturer, and Innovatek, owned by entrepreneur Carlo Fulchir.

In the 12 months ended Dec. 31, net sales totaled 1.02 billion euros, down 4.8 percent compared with 1.08 billion euros in 2022. At constant exchange rates, revenues decreased 2.3 percent. This was in line with preliminary sales released in January.

In 2023 organic sales, which represent the most significant indicator of the underlying business performance, fell 1.3 percent.

Safilo’s owned brands have grown to represent around 44 percent of sales. The online channel accounted for 16 percent of the total.

Carrera sunglasses for spring 2024.
Carrera sunglasses for spring 2024.

In the last quarter, sales stood at 239.6 million euros, marking the best performance of the year, equal to growth at constant exchange rates of 2 percent but showing a 2.4 percent decrease at current exchange rates.

On the licensed brands front, 2023 further confirmed Boss and Tommy Hilfiger’s collections as key, while among the most recent partnerships, Carolina Herrera, which joined Safilo’s portfolio in 2022, and David Beckham, a brand launched for the first time in eyewear in 2020 and already one of the group’s core brands, were singled out for their double-digit performances.

For the full year, sales in North America were down 9 percent to 452.9 million euros, accounting for 44.2 percent of the total. The market improved in the last quarter of 2023, registering sales of 111.9 million euros, down 2.2 percent at current exchange and up 3 percent at constant forex, thanks to a greater stability of the eyewear segment in the traditional channels of independent opticians and chains, and the growth of Blenders and Smith in their DTC channels.

Safilo cited a “weakness” of the North American market, and the over 60 percent drop in revenues recorded in the former GrandVision chains.

In the 12 months, revenues in Europe decreased 3.1 percent to 411.8 million euros, representing 40.2 percent of the total.

Sales in Asia Pacific were up 3.9 percent to 59.9 million euros, while they rose 3.8 percent in the Rest of the World area to 100.1 million euros.

At the adjusted earnings before interest, taxes, depreciation and amortization level, the year closed with a margin of around 9 percent. This excludes non-recurring costs expected for the year, also due to the transfer of the Longarone plant, and to the termination of activities related to exiting licensed brands

Chief executive officer Angelo Trocchia said overall 2023 was a complex year in which a difficult geopolitical and macroeconomic environment added to the firm’s direct challenges. “It was particularly important for us to achieve a level of revenue very close to the strong performance recorded in 2022, when growth, compared to pre-pandemic 2019, was up 12 percent,” he said.

During the conference call, Trocchia forecast growth for key brands like Carrera and Polaroid.

“We look to 2024 with confidence, hoping that both our challenges and the opportunities arising from the continuous growth of our portfolio of home brands and core licenses will find their place in a more stable international scenario,” he said.

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