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Safilo Q3 net sales decline 9 percent

By Prachi Singh

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Business

Safilo Group S.p.A. said in a statement that the company closed the third quarter of 2018 with total net sales of 221.5 million euros (252 million dollars), down 9 percent at current exchange and 8.4 percent at constant exchange rates. The company added that business trends in North America and Europe remained soft, similar to those reported in the first half of the year, while emerging markets turned negative, also due to a challenging comparison base.

Commenting on the results, Angelo Trocchia, Safilo’s CEO, said in a statement: “In the third quarter, we accelerated the important work on the fundamentals on which we aim to build our new 2020 business plan. On the cost savings front we are progressing well, both at the COGS level and in the area of our Overhead expenses, which in the quarter allowed us to improve the gross margin vs. year ago, and to hold up well at the adjusted EBITDA level where at constant exchange rates we were in line with last year.”

Review of Safilo’s financial performance

In the third quarter, gross margin equalled 50.7 percent of net sales, up 120 basis points or 180 basis points at constant exchange compared to the 49.5 percent recorded in the same period of last year, while adjusted EBITDA margin stood at 5.4 percent of net sales, down 90 basis points compared to 6.3 percent in the third quarter of 2017.

Overall, in the first nine months of 2018, the company said, net sales equalled 713.7 million euros (813 million dollars), 9.7 percent lower at current exchange rates and 5.6 percent at constant exchange rates. Gross profit reached 366.5 million euros (417.4 million dollars), 10.1 percent lower compared to 2017, while gross margin stood at 51.3 percent of net sales compared to 51.6 percent in the first nine months of 2017. Excluding 4.4 million euros of non-recurring costs, adjusted EBITDA equalled 37.2 million (42.3 million dollars), 5.2 percent of net sales compared to 43.2 million euros (5.5 percent of net sales) in the first nine months of 2017. At constant exchange rates, gross margin and adjusted EBITDA margin were up 20 basis points compared to the first nine months of 2017.

Safilo’s results across core markets

In the first nine months, net sales in Europe of 331.6 million euros (377.7 million dollars), were down 8 percent at current exchange and 6.8 percent at constant exchange rates, while in the third quarter, net sales in Europe of 91.7 million euros (104 million dollars), were down 7.1 percent at current exchange and 5.9 percent at constant exchange rates compared to the third quarter of 2017.

In the first nine months, net sales in North America were 280.3 million euros (319 million dollars), down 13.8 percent at current exchange and 7.7 percent at constant exchange rates and in the third quarter, net sales equalled 96.6 million euros (110 million dollars), down 6.7 percent at current exchange and 7.8 percent at constant exchange rates compared to the same quarter of 2017. At constant exchange rates, the wholesale revenues decreased by 6.5 percent in the first nine months, after reporting a decline of 5.6 percent in the third quarter.

Retail sales at the Solstice stores in the US of 39.9 million euros (45.4 million dollars) in the first nine months and 13.4 million euros (15.2 million dollars) in the third quarter, were down 14.3 percent and 19.4 percent respectively. The Group closed 22 Solstice stores in the last twelve months, taking the network to a total of 81 stores at the end of September 2018. Same store sales performance was negative by 6.1 percent and 8.3 percent, respectively in the first 9M and in Q3 2018.

In the first nine months, net sales in Asia-Pacific of 47.9 million euros (54.5 million dollars), were up 5 percent at current exchange and 10.8 percent at constant exchange rates compared to the first nine months of 2017. In the third quarter, the region recorded net sales of 15.4 million euros (17.5 million dollars), down 7.7 percent at current exchange and 8.3 percent at constant exchange rates compared to the third quarter of 2017.

In the first nine months, net sales in the rest of the world were 53.9 million euros (61.3 million dollars), down 8.9 percent at current exchange but up 0.9 percent at constant exchange rates compared to the first nine months of 2017. In the third quarter, net sales of 17.9 million euros (20.3 million dollars), were down 26.8 percent at current exchange and 21.5 percent at constant exchange rates compared to the same quarter of 2017.

Picture:Facebook/Galleria Safilo

Safilo