Strong starts to 2020 at both Safilo Group and EssilorLuxottica were quickly negated by the coronavirus pandemic in March. Both companies subsequently reported bouncebacks in the period where lockdown restrictions lifted, but positive outlooks were cautious as infection rates rise globally.
Covid-19 meant Safilo Group experienced a sales decline in April and May of around 75%, the company reported in its half-year results in June. However, it also experienced a positive reaction in the third quarter of the year, with North America, China and some of the group’s core European countries all highlighted as positive markets for the company, as well as continued online sales growth.
In the third quarter of 2020, net sales grew by 6% to €219.1m at constant exchange rates when compared to the same quarter in 2019. Net sales were at €554.7m for the first nine months of 2020, which was down 21.1% at constant exchange rates.
Digital growth
Safilo said business was led by ‘the significant rebound’ of the wholesaler market in North America and the contribution of new brands Blenders Eyewear and Privé Revaux, as well as Smith’s direct to consumer sales. The group’s total online sales rose to 16% of total turnover and, in the first nine months of 2020, Safilo’s total online sales accounted for around 13% of the group’s total net sales, from 3.7% in the same period of 2019.
Safilo said cost savings and contingency measures meant adjusted EBITDA was positive in quarter three; up 9.3% to €14.3m compared to 2019 and a margin of sales of 6.5%, which meant adjusted EBITDA for nine months was now at -€13.9m.
Angelo Trocchia, CEO at Safilo, said: ‘After we were heavily impacted by the Covid-19 outbreak and the consequent global lockdowns between the first and the second quarters of the year, in the third quarter our business had a positive reaction reflecting, on one side, the sales rebound recorded in July as an expected catch-up effect after the strong H1 pandemic impacts, and, on the other side, a dynamic US market continuing into August and September, making North America the main driver of our recovery.
Angelo Trocchia, CEO at Safilo
‘It is also important to note that in the third quarter, all our core markets and channels recorded an improvement compared to the first half of the year, from an outstanding growth in China to more positive results in some of the main European markets such as Italy, Germany and France, while the IMEA countries, Latin America and the travel retail channel remained key hurdles to a full recovery.’
Trocchia added that the group faces further uncertainties for the rest of the year due to the pandemic and shared that its priority was the health of its staff across the business.
Covid-19 rebound
At EssilorLuxottica, revenue was down 1.1% at constant exchange rates compared to the same period in 2019, totalling €4.08m. The company said it was a strong recovery compared to the second quarter of 2020, while consolidated revenue was at €10.31m, a 21.2% decline year-on-year, in the first nine months of 2020.
During the third quarter of 2020, growth for EssilorLuxottica was strongest in North America, where revenue decreased by 1.5% at current exchange rates to €2.26m, compared to Europe where revenue decreased by 0.2% to €1.03m. In Europe, the company noted that the UK was among its weakest performing countries due to Covid-19’s business environment, particularly in its lenses and optical instruments, wholesale and retail businesses.
In its nine-month analysis, EssilorLuxottica noted that recovery from the impact of Covid-19 started in May as lockdowns gradually lifted. Revenues across all regions were down double digits in the first nine months of the year, with revenue at constant exchange rates down 21.6% to €2.5m in Europe.
A joint statement from Francesco Milleri, deputy chair and CEO of Luxottica, and Paul du Saillant, CEO of Essilor, highlighted that the company is pleased with its rebound in the third quarter.
Francesco Milleri, deputy chair and CEO of Luxottica
‘With the second wave of Covid-19 leading to new lockdowns in Europe, our priority remains the protection of our employees and the engagement with our customers and stakeholders, while we continue to closely manage business continuity and to control costs.
‘EssilorLuxottica has become stronger in these unusual business conditions, which have shown the clear benefit of our resilient optical business and our balanced mix in terms of products, segments and geographies,’ Milleri and du Saillant said.
Paul du Saillant, CEO of Essilor
Optical business
EssilorLuxottica said that optical businesses represented 70% of its revenue and drove sales in the third quarter, which it added was supported by pent-up demand and increased awareness of eye health. The eyewear and lens company said eye care professionals were backed by branded products that were well-suited to the current situation that enhanced the in-store consumer experience. ‘Post-lockdown conditions revealed the strong entrepreneurial spirit driving eye care practitioners and their ability to adapt swiftly to the new business environment,’ the company stated.
E-commerce was up 40% to a record €878m in the first nine months of 2020, which was led by its Ray-Ban, Oakley and Sunglass Hut websites. The company said: ‘Multiple digital initiatives rapidly transformed the company’s go-to market strategy. These included the extended rollout of Smart Shopper and in-store tele-optometry.’
In its outlook, EssilorLuxottica said it would approach the next few months with prudent confidence, remaining tentative about the pandemic but ‘confident about the structural resilience of optical needs.’
