(Padua/Italy) – The Board of Directors of Safilo Group S.p.A. has reviewed and approved Q1 2018 economic and financial key performance indicators.
Safilo closed the first quarter of the year at May, 9th with a significant recovery compared to the same period of 2017 and a return to normal operating conditions, recording strong growth rates in the European markets and in the emerging countries which had been meaningfully impacted last year by the difficult start-up of the new information system in the Padua distribution center. Excluding the impact from the weaker USD, sales in North America remained soft, in particular due to the still difficult business environment in department stores.
In Q1 2018:
Net sales equaled Euro 250.9 million, up 6.9% at current exchange rates and 15.4% at constant exchange rates, compared to Euro 234.6 million in Q1 2017. The Brand Portfolio, up 16.9% at constant exchange rates, excluding Gucci business, was enriched by the launch of the new licenses, Moschino, Love Moschino and rag & bone;
Gross profit reached Euro 127.5 million, up 9.1% compared to Euro 116.8 million in the first quarter of 2017. Gross margin increased to 50.8% of net sales compared to 49.8% in Q1 2017;
excluding Euro 1.7 million of non-recurring costs, adjusted(1) EBITDA was equal to a profit of Euro 13.1 million (5.2% of net sales) compared to the loss of Euro 6.2 million (-2.7% of net sales) in Q1 2017;
Safilo’s Net Debt stood at Euro 166.0 million, compared to Euro 131.6 million at the end of December 2017.
In Q1 2018:
total net sales in Europe equaled Euro 123.5 million, up 25.5% at current exchange rates and 26.8% at constant exchange rates compared to Euro 98.5 million in Q1 2017. The Brand Portfolio, excluding Gucci business, increased by 31.1% at constant exchange rates, recording significant growth rates in the majority of the markets which had been meaningfully impacted in Q1 2017 by the difficult start-up of the new information system in the Padua distribution center.
sales in North America were Euro 94.8 million compared to Euro 114.5 million in Q1 2017, down 17.2% at current exchange rates due to the sharp depreciation of the Dollar against the Euro. At constant exchange rates, the wholesale revenues decreased by 5.5%, mainly reflecting the persistence of a weak and changing business environment in department stores. In the quarter, Solstice sales were Euro 11.8 million, posting an increase of 1.4% at constant exchange rates, while same store sales performance was positive by 2.5%. The Group closed 16 Solstice stores in the period, taking the network to a total of 86 stores at the end of March 2018, compared to 105 stores at the end of March 2017.
sales in Asia-Pacific equaled Euro 14.3 million, up 29.3% at current exchange rates and 44.3% at constant exchange rates compared to the difficult start to the year posted in Q1 2017. After the progressive sales recovery recorded during the second half of 2017, the improvement in the first three months of 2018 was significant for the majority of the brands, key markets and channels of the region.
sales in the Rest of the World were Euro 18.2 million, up 72.1% at current exchange rates and 95.2% at constant exchange rates, almost doubling the business recorded in Q1 2017. In the period, Brazil, Mexico, India and Saudi Arabia represented the most dynamic markets, together with the countries where Safilo had more recently entered through local distribution partnerships.
(1) In Q1 2018, the adjusted EBITDA excludes non-recurring costs for Euro 1.7 million, mainly related to the CEO succession plan, and it includes an income of Euro 9.8 million, as pro-rata portion of the accounting compensation for the early termination of the Gucci license, equal to Euro 39 million for the full year 2018.
In Q1 2017, the adjusted EBITDA excluded non-recurring costs for Euro 3.3 million, mainly related to the reorganization of the Ormoz plant in Slovenia and other overhead cost saving initiatives, and it included an income of Euro 10.8 million, as pro-rata portion of the accounting compensation for the early termination of the Gucci license, equal to Euro 43 million for the full year 2017.
(2) The new accounting standard IFRS 15 regarding “Revenue from contracts with customers” entered into effect starting from 1 January 2018. Following the fully retrospective approach chosen by the Group, the first application of the principle to the first quarter of 2018, had an adjustment effect on the sales and cost of goods sold of the first quarter of 2017 equal to Euro 2.7 million, with a neutral effect on the gross profit. Consequently, Q1 2017 total net sales were adjusted to Euro 234.6 million (compared to Euro 237.3 million reported last year), while gross profit remained equal to Euro 116.8 million.