Safilo in the red for 2020 but Q4 numbers and online growth look good
Italian eyewear giant Safilo has reported its Q4 and full-year results and in the light of the pandemic, the figures look fairly impressive. The company managed to achieve a sales increase in the latest quarter and its adjusted EBITDA also rose, while the second half was in positive territory as well.
That said, the numbers were all negative for the year as a whole with the only figures that rose being the level of the company's debt and its larger net loss. This is no surprise though, given the events of last year.
So let's look at the numbers. Net sales in Q4 rose 3% at constant currency to €225.6 million, although they were down 2.1% at current exchange rates. Adjusted EBITDA rose 34.5% to €15 million.
In the second half, net sales rose 4.5% to reach €444.7 million and were also up 0.4% at current exchange rates. Adjusted EBITDA was up 21% to reach €29.3 million.
As mentioned, the numbers were less encouraging for the full year, but given that the year included massive numbers of store closures, the virtual cessation of trading through airport shops, and consumers globally unable to go out or go on holiday, that's no surprise.
The company’s net sales fell 15.2% at constant currency to €780.3 million, and were down 16.9% at current exchange rates. Adjusted EBITDA fell a massive 98.4%, almost (but not quite) wiping out the company’s profit. In the end, it made EBITDA of €1 million, down from €65.4 million a year earlier. The adjusted group net loss was €46.5 million, wider than the €6 million loss in 2019.
And during the year, group’s net debt rose to €221, million from €74.8 million, although €111.8 million of this was for acquisitions.
CEO Angelo Trocchia said that “2020 presented the most challenging market conditions we have ever experienced”. But he highlighted how the “significant” pandemic impact in the first half of the year was “followed by a solid sales recovery in the second half”.
Even so, Q4 “reflected again a more challenging marketplace, as fresh restrictions were imposed above all in Europe to contain the second wave of the pandemic”. But he was “therefore particularly pleased with our positive finish to the year, which we think confirms the strategic directions we set out at the end of 2019 and the business priorities we gave ourselves to accomplish our Plan”.
That Q4 resilience was helped by the sequential improvement, quarter-on-quarter, of its wholesale2 activities, thanks to the strength of its North American market, “where we kept leveraging on the capabilities we built to better serve our customers in the independent opticians channel”. In Q4, key growth drivers were the US, China and Australia that “allowed us to almost fully offset the impact of the challenging market environment in Europe and in a number of emerging countries”.
He also said that “in a year in which e-commerce and social digital marketing leapfrogged in consumer relevance, the significant progress of Smith’s direct-to-consumer business and the acquisitions of Privé Revaux in February and of Blenders Eyewear in June, gave a strong boost to the digital transformation strategy we announced in December 2019”.
In fact, its total online business grew sharply in 2020, contributing around €100 million or 13% to its net sales, from around 4% in 2019.
And it’s looking forward to a stronger 2021 after actions taken in 2020. Last year it launched four new brands (Levi’s, David Beckham, Missoni and Ports) and was getting ready for the launch of Isabel Marant and Under Armour at the beginning of this year.
As well as it results, the company announced its intention to close its Slovenian production site in Ormož starting in June. It’s part of its plan to realign the group’s industrial capacity to current and future production needs. The closure will affect 557 employees.
It follows the closure of the Italian Martignacco production site last year and the reorganisation of the Longarone site, which is still ongoing.
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