Safilo Group CEO Mr Angelo Trocchia remains optimistic after “a complex” 2023 for the global eyewear company challenged by a weakened North America market and lost business through EssilorLuxottica’s acquisition of the GrandVision optical chain in Europe.
Meanwhile, the group’s Asia Pacific sales increased to Є59.9 million (AU$99 m), up 9.1% at constant exchange rates and 3.9% at current exchange rates, compared to Є57.7 million (AU$95 m) recorded in 2022. Key drivers of this were the Smith brand in both Australia and Japan, BOSS, Ports and Polaroid in China and Hong Kong, and Carrera and Tommy Hilfiger in India and the Middle East.
Commenting on Italian-headquartered company’s full 2023 financial performance, Trocchia had praise for the European business – down 0.6% at constant exchange rates and 3.1% at current exchange rates – despite a more than 60% drop in revenue after GrandVision’s integration with EssilorLuxottica, with a footprint of around 7,000 stores.
Overall, Safilo’s sales were down 2.3% at constant exchange rates and 4.8% at current exchange rates compared to 2022.
“In a complex year like 2023, in which a tense and unstable geopolitical and macroeconomic environment added to our direct challenges, it was particularly important for us to achieve a level of revenue very close to the strong performance recorded in 2022, when growth, compared to pre-pandemic 2019, was +12%,” he said.
“North America continued to be affected by the prudent attitude of the main eyewear distribution channels and by an unfavourable sun season, while in Europe the incredible job of our teams allowed us to effectively offset the decline of the business in the former GrandVision chains, further demonstrating the resilience of our group and the value of a strategy that sees our customers as the focus of the entire company.”
In 2023, Trocchia said Safilo also looked hard at its industrial footprint with a brand portfolio that was “no longer aligned with the know-how present” in its historic Longarone plant, in northeast Italy. The site was sold to Thélios, the eyewear division of French luxury good group LVMH.
“The project was complex, but we managed to reach the conditions for the best possible outcome, with the disposal of the plant and the full employment of all the workers, also allowing for the preservation of the sector’s existing know-how,” he said.
In terms of Safilo’s product portfolio, Trocchia acknowledged the early renewal of licenses including Kate Spade, Tommy Hilfiger, BOSS and HUGO, as well as other important partnerships. The group signed two new agreements with Etro and Stuart Weitzman.
“This was a very important achievement for us, which sits alongside the solid and long-lasting growth of our home brands, an almost unique portfolio in the industry, which, in 2023, at approximately 44% of our sales, progressed on our target of representing over 50% by 2027,” he said.
“From an economic standpoint, our performance was characterised by the significant improvement of the adjusted gross margin, close to the group’s historical highs, which we decided to reinvest in those projects instrumental to the growth of the company in the long term. Notwithstanding the inflationary pressures and an unfavourable operating leverage, we progressed with the investments envisaged in our business plan, closing the year with an adjusted EBITDA margin not far from the 2022 level, the best in the last seven years. The adjusted net profit, on the other hand, contracted, mainly due to the revaluation of the options on minority interests.
“The past year was above all one in which we returned to a positive cash generation, the first after many years.”
In 2023, Safilo also progressed its sustainability strategy through an official commitment to scope one, two and three greenhouse gas reduction targets validated with the Science Based Target initiative in February 2024.
“We look to 2024 with confidence, hoping that both our challenges and the opportunities arising from the continuous growth of our portfolio of home brands and core licenses will find their place in a more stable international scenario,” Trocchia said.
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