PADUA, Italy—The board of directors of Safilo Group S.p.A. (SFL.MI) has approved the results for the second quarter and first half of 2010, reporting a reduction in overall losses and an increase in group sales, particularly in the wholesale channel.

Sales in the second quarter of 2010 increased by 7.3 percent over the same period 2009, from €274.2 to €294.3 million. For the first half of 2010, sales increased 3.2 percent over 2009, from €562.1 to €580.3 million, excluding the optical retail chains in Australia and Spain which were no longer owned by the company in 2010. During the periods in consideration, Safilo’s profitability improved, mainly as a result of effective fixed costs absorption, SG&A expenses lower incidence on revenues, and the sale of the non profitable retail chains.

The company reported a loss of €3.3 million in the first half of 2010 (compared with the loss from ordinary activities of €7.9 million in the first half of 2009). The company also reported a net loss of €5.0 million recorded in the second quarter of 2010 (compared with the loss from ordinary activities of €9.6 million in the second quarter of 2009). The net result of the period was then affected by a higher tax rate, as a result of the Group’s decision not to accrue deferred tax assets, a statement said.

The performance of the wholesale channel showed improvement in Q2 of 2010, with revenues growing by 9.7 percent to €268.9 million compared with €245.2 million in the second quarter of 2009. Sales in the first half of 2010 grew by 5.7 percent with sales of €536.4 million, compared to €507.7 million in the first half of 2009.

Performance of the retail channel contracted by 19.3 percent to €43.9 million in the first half of 2010 due to the disposal of the Australian and Spanish stores which occurred in December 2009. The decline of the channel was 12.4 percent in the second quarter of 2010, though at constant perimeter and exchange rates, the retail channel would have been up by 19.1 percent and 20.1 percent respectively in the first half and the second quarter 2010, due to the good performance of Solstice stores which grew by 19.4 percent compared with the first half of 2009.

In the first half of 2010, sales of sunglasses grew by 5.9 percent performing better than prescription frames which slightly declined by 0.6 percent. Sales of sunglasses saw a marked upturn in Q2 of 2010, growing by 14.5 percent, while performance of prescription frames was weaker in Q2 2010, declining by 4.4 percent over the same period 2009.

From a geographical point of view, in the first half of 2010, sales in the Americas amounted to 40.4 percent of Safilo’s total business and registered an increase of 8.4 percent over the same period of 2009, while in Q2 of 2010, the U.S. market continued to register higher sales of sunglasses at the main department stores and at Solstice directly operated shops. This, coupled with a solid expansion of the sport business and positive trends in Latin America, allowed the company to achieve further growth in the quarter, with sales increasing by 15.3 percent, despite a slow prescription frames business. Europe remained flat over comparable periods last year, while the Asian markets, led by China, experienced further improving trends showing increases in sales volumes, as well as in average selling prices.

Stated Roberto Vedovotto, CEO of the Safilo Group: “We closed the first half of the year with some positive results: mid single digits top line growth , better profitability and working capital management and improved financial leverage. However, we maintain a cautious stance for the remainder of the year, mainly as a result of the still challenging conditions in our core European markets and the uncertainties on the resilience of consumer spending growth in the US.”

The company’s net financial position at the end of June 2010 significantly improved totaling €269.4 million, compared to the €588.0 million recorded at the end of December 2009 and €315.4 million at the end of March 2010. The net financial position, which in March 2010 had almost halved compared to the end of 2009 due to the capital injections from HAL Holdings N.V. successfully completed in February and March 2010, further improved at the end of June as a result of the positive cash generation recorded during the second quarter 2010.