MILAN — Safilo Group SpA on Thursday said net profits in 2014 jumped 14 percent on the back of increased sales, especially in the Americas; lower financial costs, and the “step-change in Safilo’s global commercial strategy and operations.”
In a statement after the close of trading in Milan, where Safilo is listed, the company said that net profit, adjusted for some one-off voluntary exit incentives and reorganization costs, increased to 44.5 million euros, or $59.2 million, from 39 million euros, or $51.2 million, in 2013.
Group net sales in the full year climbed 5.9 percent at constant exchange rates, to 1.18 billion euros, or $1.57 billion, as the company kept a “clear focus on quality of sales and sustainable distribution.”
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Dollar amounts have been converted at average exchange for the periods to which they refer.
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Safilo — which produces prescription and sunglass frames for licensed brands including Alexander McQueen, Banana Republic, Dior and Marc Jacobs, as well as for own brands including Carrera and Polaroid — said that North America and Latin America were “key growth drivers” last year, with revenues in the latter jumping by 20 percent over the whole year and 40 percent in the last quarter. In the U.S., sales over the whole year increased 9.2 percent, at constant exchange rates, to 494.7 million euros, or $658 million, while revenues in the fourth quarter jumped 15.4 percent, at constant exchange rates, “marking excellent performance across all channels,” the company said.
In Europe, sales increased 3.7 percent at constant exchange rates in the full year, to 486.8 million euros, or $647.4 million, with Russia weighing negatively in the fourth quarter. The company said that its brands’ net sales grew and gained market share “in an overall weak market environment” and pointed out that Spain and Portugal were its “best-in-class market players consistently during the year.” Turnover in Safilo’s home country showed some signs of improvement with market share net gains “starting from the second half” of the year, which resulted in net sales growth over the full year. Revenues grew by double-digits in Germany and the Nordic countries, while new, long-term commercial agreements developed with “strategic market chains” in the U.K. helped boost sales in that market, especially in the fourth quarter.
In Asia, sales were flat, at 177.1 million euros, or $235.5 million. Safilo said that 2014 was “a year of redefining our Asian go-to-market strategy and organization, improving quality of sales, establishing China as a region in its own right, and putting new leadership in place.” However, in the fourth quarter revenues from the region were up 10 percent on the year-earlier period, an indicator that the measures were beginning to take effect.
In terms of licenses, Safilo singled out the strong performance of Boss and Tommy Hilfiger, pointing out that “strong sales trends…confirmed their potential to become Safilo’s future core brands.” The company also said that the Max Mara licenses were an “opportunity,” following double-digit sales growth in 2014. Sales at Céline and Jimmy Choo also “grew significantly” the company said, “confirming their potential as high growth brands,” while Gucci sales were “broadly flat.”
At the high end of its product portfolio, the company said that the Dior license brought in “solid sales…throughout the year.” House brands had mixed results, with Polaroid showing strong a performance over the full year, while Carrera sales declined in the sun category and were essentially flat in frames. Polaroid sales grew more than 20 percent for the second year in a row, boosted by Spain, Germany and Russia.
Earlier Thursday, Safilo revealed that it had signed a new licensing agreement with Givenchy for sunglasses and optical frames collections, running from January 2016 through December 2021 and renewable “upon mutual agreement.”