Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Safilo Group SpA (SAFLF, Financial) reported strong momentum for its Carrera and David Beckham brands, achieving double-digit growth.
- The company recorded a positive cash flow from operating activities, higher than the previous year, which was reinvested in brand portfolio development.
- Safilo Group SpA (SAFLF) achieved a gross margin improvement to 60.1% in Q2, up from 59.1% in the same period last year.
- The independent optician channel in Europe showed resilience, supported by the advanced B2B platform, You&Safilo.
- The adjusted EBITDA margin improved to 10.1% in Q2, 60 basis points higher than the previous year.
Negative Points
- Total sales performance remained soft in Q2, with a 3.1% decline in revenues.
- The exit of the Jimmy Choo brand had a significant negative impact on sales, particularly in North America and Europe.
- The recovery in North America was softer than expected, with a 4.4% sales drop in Q2.
- Smith's wholesale business faced challenges, particularly in the sports shop channel, due to high stock levels and unseasonal weather.
- Sales in the Asia Pacific region were down 11.3% in Q2, impacted by a challenging comparison base from the previous year.
Q & A Highlights
Q: Can you give an update on the trend seen in July, particularly in America in sports and eyewear? Also, what are your expectations for net debt in the second half of the year?
A: (Angelo Trocchia, CEO) In July, we haven't seen a significant change in market dynamics. The US eyewear market is improving month by month, while the sports shop channel remains weak. In Europe, sunglasses reorders are still soft. (Michele Melotti, CFO) We aim to continue being cash positive in the second half and expect full-year free cash flow to turn positive.
Q: Can you elaborate on the strategy for David Beckham now that you have the perpetual license? How will you avoid cannibalization with Hugo Boss eyewear?
A: (Angelo Trocchia, CEO) We are focusing on expanding distribution in Europe and North America and improving productivity in the Middle East. David Beckham will not be part of any Boss eyewear campaigns, so there is no risk of cannibalization. His involvement with Boss is in other categories, not eyewear.
Q: Are you seeing improvements in the North American eyewear market in both prescription and sunglasses? Also, any updates on the Marcolin situation and your view on smart glasses?
A: (Angelo Trocchia, CEO) We see improvements in both prescription and sunglasses, with a shift from luxury to more contemporary offerings. Regarding Marcolin, no comment. On smart glasses, we see potential for growth in the category but don't expect it to impact our P&L significantly in the short term.
Q: What was the growth in France, and is it sustainable? Can you elaborate on the current trading in Europe, especially for sunglasses?
A: (Angelo Trocchia, CEO) Growth in France is driven by a strong portfolio, including Carrera and Isabel Marant. The combination of traditional sales and our B2B platform is also helping. In Europe, prescription sales are strong, but sunglasses have been affected by poor weather. We expect recovery with new collections in September.
Q: What is the expected impact of Jimmy Choo's phase-out in H2, and are there any planned price increases?
A: (Michele Melotti, CFO) The impact of Jimmy Choo will be lower in H2 than in H1. We don't comment on specific pricing actions, but the positive contribution will come from initiatives already implemented.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
