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MILAN — Safilo Group‘s said it will seek more secure, perpetual licenses and continue with plans to expand its portfolio, despite reporting a drop in its first-quarter sales.
The quarter was hit in part by the loss of its Jimmy Choo license, which ended at the end of December. Jimmy Choo inked a deal with the world’s largest eyewear manufacturer EssilorLuxottica for a 10-year license agreement last June.
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In a statement released Tuesday, Safilo said its sales dropped to 277.2 million euros, down 3.5 percent compared with 287.2 million euros in the same period last year. At constant exchange rates, sales edged down 1.8 percent.
In a conference call with analysts, chief executive officer Angelo Trocchia said the results were in line with expectations. The second quarter, Trocchia said, is already looking up. “Overall, April was a positive month driven by a continuation of a very solid trend in Europe, where in North America performance was better than the first quarter, but still negative,” he said, adding that the contemporary segment remains “volatile” in the region.
Safilo’s chief financial officer Michele Melotti echoed this. “We are very glad to be able to confirm a positive free cash-flow generation also in this quarter, notwithstanding the seasonality of the business and fourth quarter of last year, which was better than expected in terms of cash generation.”
In the first quarter, adjusted earnings before interest, taxes, depreciation and amortization, excluding non-recurring costs of 3.9 million euros related to the potential costs of the terminated licensing agreement, amounted to 32 million euros, or a margin of 11.5 percent, in line with 32.4 million euros, or a margin of 11.3 percent, in the first quarter of last year.
In the three months ended March 31, sales in North America decreased 7.2 percent to 114.5 million euros from 124.7 million euros in the same period a year earlier. Sales performance in the region was dragged down in part by a subdued winter season that hit Smith’s business in physical sport shops; however, Blenders and Smith’s direct-to-consumer business recorded “good growth,” Safilo said.
In Europe, revenues in the period outpaced other regions, rising 5.8 percent to 125.3 million euros, as the group debuted the Etro eyewear collections and were helped by a positive performance of Carrera and David Beckham, which were both up by double digits. Business was helped by the “excellent progress of the business” in Poland and Turkey and France, the company said.