Safilo Group (SFL) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 saw margin and cash generation growth despite soft sales, with Europe showing resilience and recovery after new collection launches, while North America and Asia remained challenging.

• Margins and free cash flow improved, supported by structural gross margin growth and effective working capital management.

Financial highlights

• Q3 2024 net sales were €225.4M, down 4.1% reported and 3.4% at constant FX; 9M 2024 net sales were €757.4M, down 3.5% reported and 2.7% at constant FX, mainly due to the Jimmy Choo exit.

• Excluding Jimmy Choo, sales were flat year-over-year.

• Q3 gross margin improved to 59.1% (+140 bps YoY); 9M gross margin was 59.7% (+120 bps YoY).

• Q3 adjusted EBITDA margin was 7.9% (+20 bps YoY); 9M adjusted EBITDA margin was 10.0% (+40 bps YoY).

• Q3 free cash flow was €16.9M; 9M free cash flow was slightly negative at €2.1M due to a €35M investment in the David Beckham license.

• Net debt at September 30, 2024, was €96.1M, down from June but up from December.

Outlook and guidance

• Near-term outlook remains cautious, especially in North America, with focus on operational efficiency and financial discipline.

• Q4 gross margin expected to remain close to last year’s high level, with full-year margin well above 2023.

• Pricing expected to remain a tailwind in Q4 and 2025.

• No significant increase in marketing spend expected in Q4; higher investments planned for priority brands in 2025.

• Management remains focused on margin improvement and cash flow generation.