Safilo Group Reports Increased Profits for Q1

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PADUA, Italy—The board of directors of Safilo Group S.p.A. (SFL:MI) has approved the results of the first quarter of 2014 ended March 31, 2014.

In the first three months of the year, Safilo posted a decrease in net sales of 1.3 percent, from €297.0 million in 2013 to €293.2 million for the same period in 2014. The group net profit posted a 22.9 percent increase, reaching €16.5 million from €13.4 million recorded in the first quarter of 2013.

“In this first quarter of 2014, results were broadly coherent with the medium and long term strategy that we have chosen to implement for our business, and that guides our operational choice,” said Luisa Delgado, Safilo Group’s CEO. “We aim to grow our business in a sustainable and profitable way. Our focus is to design leading-edge branded eyewear, strengthen the quality of our distribution worldwide to bring to life the different DNA of our brands, and partner with our customers through joint business planning. During this quarter, we consolidated our positions in the different markets and key distribution channels, which has enabled us to improve the economic and financial components of the business.”

Worldwide, Safilo’s wholesale sales were reported at €276.7 million, down from the €279.6 million of the first quarter of 2013, a decrease of 1.0 percent, while wholesale sales in the U.S. equaled €112.9 million, down from €118.6 million in the first quarter of 2013, a decrease of 4.8 percent.

“In the quarter, we gradually introduced Fendi in key worldwide markets and launched the first Bobbi Brown eyewear collection in the United States and Canada,” added Delgado. “Based on the initial positive market receptions, these two new businesses promise a satisfactory first year with sustainable quality growth potential. Among Safilo’s proprietary brands, I would like to mention Polaroid’s continuous positive momentum both in core and new markets.”

The 132 Solstice stores in the U.S. reported sales of €16.5 million, a decrease over the comparable period of 2013 due to the bad weather conditions that affected North America earlier this year, the company said. Additionally, according to Safilo, the U.S. market was partially affected by a soft performance in the retail business, and more generally in the prescription frame business at the independent opticians’ stores.

In the period, Safilo established a new business unit dedicated to the development of the Latin American markets, which, in the first three months of the year, delivered the best performances, highlighting the as of yet untapped potential for Safilo in this area of the world, the company noted.

The first quarter of 2014 ended with a net debt of €207.5 million, down €12.9 million compared to that recorded at the end of the first quarter of 2013 at €220.4 million, though it has increased €25.0 million compared to the €182.5 million reported on Dec. 31, 2013.

Additionally, the company stated that it has been informed by HAL Holding N.V. (HAL) that, although the ownership interest of HAL in the company is below 50 percent, IFRS 10 requires the company to be consolidated on a line-by-line basis in the consolidated financial statements of HAL as of Jan. 1, 2014.

To facilitate HAL in complying with its obligations under IFRS 10 and to provide a framework for Safilo to provide certain information to HAL, the board of directors of Safilo Group S.p.A. agreed with HAL to set forth a procedure for the exchange of information which, subject to appropriate confidentiality undertakings, will allow HAL to comply with its statutory obligations to prepare consolidated financial statements in accordance with IFRS, while avoiding any interference with the company’s administrative and accounting system as well as its internal control system; and “to jointly retain an independent financial consultant who, through access and visiting rights to the appropriate management and control bodies of both concerned companies, will be required to reach his own assessments and form an opinion on any accounting/financial matters relating to the company which should be taken into account in the HAL consolidation process.”