MILAN - Italy's Safilo Group SpA revised down its full year outlook on Wednesday, after the spiraling dollar and a weak performance in Europe reduced second quarter earnings by more than a third.
The eyewear company, which has licenses with Armani, Dior, Gucci, and Valentino, among others, slashed its revenue growth forecast to 4 percent,from 7-8 percent at constant exchange, and adjusted its net income target to 3 to 3.5 percent of sales, from 4.5 to 5 percent.
The group also said it now expects earnings before interest, taxes,depreciation and amortization to reach 13.5 to 14 percent of revenues,compared to a previous estimate of around 15 percent.
Net profits slumped nearly 37 percent - for the second consecutive quarter to 7.9 million euros, or $12.4 million at average exchange, while sales dipped 4.7 percent to 310.9 million euros, or $486 million. At constant exchange, revenues gained 1.8 percent.
The figures missed analyst estimates.
"The first half of the year was characterized by strong volatility in consumer patterns, above all in Europe, our reference market,"Safilo vice chairman and chief executive officer Massimiliano Tabacchi said in a statement.
"We believe that the European market will continue to remain weak, even in the upcoming months, and we are therefore looking to the second half of the year with greater caution."
Sales in Europe fell 6.9 percent to 152.3 million euros, or $238.1 million,with Spain, the U.K. and Germany again hit by a slowdown in consumer spending. The company noted Italy registered half-yearly results in line with the first six months of the previous year, thanks above all to the strong performance of the Carrera sunglass collections.
These declines were compensated for, in part, by gains in Asia Pacific notably China and Korea where second quarter sales gained 14.6 percent to 44 million euros, or $68.7 million, following the opening of two directly operated stores, dedicated principally to the sale of prescription sales.
Sales in the Americas fell 3.3 percent to 106.4 million euros, or $166.3 million, although Safilo noted revenues in dollars which represent 40 percent of the company's business had been penalized by the negative impact of the currency's 15 percent slide against the euro in the first six months of this year.
"In the American market, we continue instead to achieve significant
results," Tabacchi said.
Tabacchi added that he expected Gucci Group to renew its contract with Safilo, "as soon as possible," dampening speculation that the eyewear company could lose the deal to Luxottica stemming from the loss of the Stella McCartney license to its rival in April.
The quarterly figures were released after the close of trading in Milan,where Safilo's stock closed up 7.3 percent to 1.15 euros, or $1.81 at current exchange.