Safilo Group reports 6.6 percent drop in Q2 sales

Italian accessories group Safilo has reported a notable decline in net sales, which dropped 8.8 percent to 263 million euros in Q2, as a result of a weakened North American market and turbulent weather conditions.

The group posted an increase in its gross margin from 56.1 percent to 59.1 percent, while its adjusted EBITDA margin dropped from 9.5 percent to 10.6 percent.

Meanwhile, for the first half of the year, Safilo reported a 3.5 percent drop in net sales to 550.1 million euros, during which time its gross margin rose from 55.8 percent to 58.8 percent and its adjusted EBITDA fell from 11 to 10.4 percent.

Despite posting a 15.3 percent decline in Q2 sales and 11.3 percent for H1 for the North American region, Safilo did experience a significant uptick in sales for the Asia Pacific region.

Here, sales equalled 16.5 million euros in Q2 at a growth rate of 36 percent, with the market mainly driven by the reopening of China, where sales soared by over 60 percent YoY.

Ports, Hugo Boss and Polaroid were the key growth drivers in these markets, while Smith led the period in Australia.

Its H1 2023 sales for the region reached 28.6 million euros, up 17 percent compared to its previous year of 25.1 million euros.

Sales in Europe dropped 4.9 percent to 114.1 million euros for Q2 but rose 0.4 percent to 235.7 million euros for H1. Meanwhile, for the rest of the world, sales were slightly down 0.7 percent to 25.5 million euros for the quarter, yet rose 7.6 percent for the half year.

During Q2, cash flow from operating activities improved to 21.1 million euros, driven by a decrease in inventories and a healthy cash collection in all the main geographical areas.

As of June 30, the group’s net debt stood at 103 million euros, down from its previous position of 113.4 million euros, reported at the end of December 2022.

In a release, Safilo’s CEO, Angelo Trocchia, said: “We entered the second quarter aware that in these three months of the year our business would be facing its biggest headwinds, from a still weak market environment in North America, exacerbated by poor weather conditions, to the expected significant drop of our sales in the former Grand Vision chains in Europe, a market in which the performance of the other channels continued to be positive.

“The quarter saw, however, a strong rebound in Asia, thanks in particular to the reopening of China, and good progress also in the emerging markets of India and the Middle East.”