PADUA, Italy—The board of directors of Safilo Group S.p.A. (SFLG.MI) has approved the company’s consolidated financial statements for the year ended December 31, 2023, and examined the separate financial statements for the year ended December 31, 2023, which will be submitted for approval by the shareholders at the annual general meeting to be held in a single call on April 24, 2024. Safilo closed 2023 with net sales of €1,024.7 million, down 2.3 percent at constant exchange rates and 4.8 percent at current exchange rates compared to €1,076.7 million recorded in 2022.

Angelo Trocchia, Safilo chief executive officer, commented, “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 percent. North America continued to be affected by the prudent attitude of the main eyewear distribution channels and by an unfavorable 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, we had to take another look at our industrial footprint in light of a brand portfolio that was no longer aligned with the know-how present in the historic Longarone plant. 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 the year, we obtained the early renewal of our core licenses, from kate spade and Tommy Hilfiger to BOSS and HUGO in January 2024, and other important partnerships. We also signed two new agreements, with Etro and Stuart Weitzman, adding to what is today a rich and complementary license portfolio, with unprecedented visibility, of around six years. 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 percent of our sales, progressed on our target of representing over 50 percent by 2027.”

In 2023, organic sales, which represent the most significant indicator of the underlying business performance, recorded a deviation of -1.3 percent, further approaching the level of revenues recorded in the previous year, despite the headwinds represented by the continuing weakness of the North American market, and the over 60 percent drop in revenues recorded in the former GrandVision chains. Net of the latter effect, the Group's organic performance was up 1.7 percent, due to the good performance of home brands, in particular Carrera and Polaroid, which grew well for the second consecutive year, and Blenders, back to growth after the post-pandemic sales normalization in online channels.

2023 also continued to highlight Smith's excellent development in the direct-to-consumer (DTC) channel, which allowed the brand to return to growth in the second half of a year which, for the sports sector, was influenced by a business slowdown in physical stores.

There was significant improvement in gross margin reinvested in the projects instrumental to the long-term growth of the group, with an adjusted gross margin at 58.7 percent, up from 55.5 percent.

Sales trends by geographical area were characterized for Safilo by the weakness of the North American market, which, after a subdued 2022 closing and a prudent start to the new year by the traditional eyewear channels, highlighted the greatest difficulties during the second and third quarters.

In the U.S., 2023 saw the growth of DTC sales, both for Blenders, following the success of the exclusive collaboration launched in the last quarter of the year with the American football icon nicknamed "Coach Prime," and for Smith, which today generates in the channel almost 40 percent of its North American business.

In 2023, Safilo’s sales in North America amounted to €452.9 million, down 6.4 percent at constant exchange rates compared to €497.7 million recorded in 2022. In Europe, Safilo almost completely recovered the sharp decline in business in the former GrandVision chains following their integration in EssilorLuxottica’s network, thus closing the year substantially stable compared to the strong growth sales of 2022.

“From an economic standpoint, our performance was characterized 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,” said Trocchia. “Notwithstanding the inflationary pressures and an unfavorable 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.”

He said, “The past year was above all one in which we returned to a positive cash generation, the first after many years. 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.”