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Gucci, Celine losses dent Safilo business but tech move offers future hope
2016 closed on a low note for Safilo as it prepared for the loss of major business with Kering's Gucci and the prospect of LVMH (with which it has key agreements) getting closer to rival Marcolin raised the chances of future problems too. But on the upside, it also prepared to dive deeper into tech-based eyewear.
The Italian group, owned by Dutch fund Hal, is the world’s second-largest eyewear manufacturer, and has recorded a turnover of €1.25m, down 2% from 2015. This is ‘further to the negative effect of brands that are no longer in the group’s portfolio,’ the group stated at the release of its preliminary annual results. At constant exchange rates, sales fell by 1.2%.
The decision made by Kering in 2014 to terminate their contracts with Safilo, including the lucrative Gucci contract that the eyewear specialist had held for 20 years, continues to have a negative impact on the group.
Since the 1st of January 2017, Gucci’s licence, which was worth €350m annually, has been transformed into a production contract of four years.
With regard to labels still present in the group’s portfolio, sales have risen 3.6% at constant exchange rates and 5.2% excluding retail channels.
In Europe, the eyewear specialist saw its sales rise by 5.7% to €537.6m last year and by 6.3% in Q4 2016. In all other markets, business was declining. Safilo sales in the Asia-Pacific region plunged by 22.5% to €114.7m. In the United States, a turnover of €509.4m (down by 4.1% compared to the previous year) saw the country slip from first place amongst the group’s top markets, a position now occupied by Europe.
The group has deployed an ambitious industrial plan for now until 2020. It has recently both renewed its crucial Dior licence with LVMH, and announced the loss of its contract with Céline, another label in the luxury group, effective from next year. The group has simultaneously reinforced its segmentation for all markets, from mass-markets to high-end, and is preparing to launch smart eyewear with the project SafiloX.
Adapted from an original story by Dominique Muret
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