Vedovotto, who returned to the company as CEO in the fall of 2008, commented, “The competitive environment is increasing and becoming more aggressive. Our industry is facing one of the most challenging times in its history. Internally, Sàfilo Group went through difficult times and faced challenges from operational and managerial viewpoints…Now it is time to address the issues, capitalize on the work carried out so far and execute our new strategy.”
Vedovotto reiterated that Sàfilo’s COO, Mario Pietribiasi, “for the first time in many years, has full managerial authority and responsibility over all of our business units. In particular, and this is different from [the] past, he will oversee sales and marketing, as well as design and production.”
Vedovotto said his strategy for 2009 and beyond would be to focus on “selective wholesale distribution and category management,” the introduction of “more appealing entry price selections for all top brands,” and a more “disciplined and selective approach to store openings.” He indicated that Sàfilo’s retail stores were currently “under review” to identify “slow performers,” but he stated he was hopeful to remain in that business, strategically, worldwide.
The fourth quarter, ending Dec. 31, 2008, reflected a serious drop, with Sàfilo Group’s net profit reported at €0.1 million, in comparison to €12.3 million for that period in 2007. For the full fiscal year of 2008, net profit was reported at €14.6 million compared to €51 million in 2007, a decrease of 71.3 percent, before accounting for an extraordinary provision for deferred taxes estimated at €35 million to €40 million.
The company’s results showed net sales in Q4 of €282.1 million, a decline of 1.6 percent compared to €289.5 million the same period 2007. Net sales for the full year 2008 were €1,147.8 million versus €1,190.4 million in 2007, a decrease of 3.6 percent.
The net financial position of the company reached €570 million in 2008, generally in line with the value registered at the end of September 2008 and higher compared to €514.6 million registered at Dec. 31 2007. Sàfilo defines net financial position as “the sum of bank borrowings and short-, medium- and long-term loans, net of cash in hand and at bank.”
“2008 has been a year of profound change and a turning point for the eyewear sector which has experienced the first slowdown after years of continued growth,” said Vittorio Tabacchi, chairman of Sàfilo, in a statement. “The areas of our business most hit by the slowdown in demand and which have been downsized in terms of value and frequency of purchase have, without doubt, been high end products and sunglasses in particular. The group recorded a drop in profitability in 2008 which resulted mostly from the impossibility, in the short term, to significantly scale down the ‘Made in Italy’ industrial costs and, from a general point of view, the numerous fixed costs in a situation of reduced production volumes,” continued Tabacchi.
In the geographical breakdown, Sàfilo’s sales in the Americas was reported as flat at current exchange rates, achieved a 6.7 percent gain at constant exchange rates. The company cited the addition of the Mexican Sunglass Island stores acquired at the beginning of 2008, the new Solstice stores opened during the period, and the good performance registered by the prescription frame collections sold through the independent opticians channel as positive contributors to this performance.
In 2008, wholesale turnover reached €1,040 million compared to €1,120.7 million in the previous year. In the fourth quarter of 2008, wholesale turnover amounted to €252.3 million, a decrease of 9.0 percent at constant exchange rates (-6.7 percent at current exchange rates). The average price of the products purchased by the group’s main direct clients, opticians, department stores and purchase chains also decreased during the last part of the year.
Strong growth in volumes over the period was achieved by house brand Carrera, while sales volumes of sunglasses showed a general decrease in all the main European and American markets.
Sàfilo Group’s worldwide retail business, which included 321 directly-operated stores at the end of December (compared to180 stores in December 2007), registered an increase of 54.6 percent at current exchange rates.
In the U.S., the sunglass chain Solstice recorded an improvement in sales at constant exchange rates, thanks to the contribution deriving from the new stores, while the Spanish Loop Vision stores suffered from the slowdown of the Spanish market. ■
