Safilo Group (SFL) H1 2024 earnings summary

Executive summary

• H1/Q2 2024 sales declined due to the Jimmy Choo exit, but strong double-digit growth in Carrera and David Beckham brands supported resilience and margin improvement.

• Positive operating cash flow exceeded last year and was reinvested in brand portfolio development.

• Europe remained resilient despite weather-related slowdowns; North America’s recovery was gradual, with Smith sports business lagging.

Financial highlights

• H1 2024 net sales were €532.0M, down 3.3% reported and 2.4% at constant exchange rates; Q2 revenues declined 3.1% year-over-year.

• Gross margin improved to 60.0% in H1 (+120 bps) and 60.1% in Q2 (+100 bps); adjusted EBITDA margin rose to 10.8% in H1 and 10.1% in Q2.

• Adjusted net result for H1 was €24.2M, up from €6.9M, aided by lower financial charges and absence of prior year one-off costs.

• Free cash flow for H1 was -€19.0M, mainly due to €41.1M investment for the perpetual David Beckham license.

• Net debt at June 30, 2024 was €100.4M, up from €82.7M at December 2023, mainly due to investments.

Outlook and guidance

• No significant change in market dynamics observed in July; U.S. eyewear improving month-over-month, sports shop channel remains weak, and European sunglasses reorder remains soft.

• Aim to remain cash positive in H2 and achieve positive full-year free cash flow.

• Impact from Jimmy Choo expected to be much lower in H2 than H1.

• Management expects continued focus on brand portfolio development and operational efficiency amid a challenging environment.

• Price/mix expected to remain a positive lever in H2, mainly from previously implemented actions.