Q2 2026 Safilo Group SpA Earnings Call Transcript
Key Points
- Safilo Group SpA (SAFLF) delivered another quarter of solid margin expansion, with adjusted EBITDA margin up 9.4 percentage points in Q2 and 5.2 percentage points in H1, driven by favorable price/mix and cost control.
- The company generated strong free cash flow of EUR36.4 million in H1, with normalized free cash flow (excluding tariff refunds and strategic investments) up to EUR46.9 million, reinforcing financial flexibility.
- Safilo Group SpA (SAFLF) received EUR22.2 million in US tariff refunds, providing a one-time boost to profitability and cash flow, with a portion to be reinvested in infrastructure and marketing.
- The company completed the acquisitions of SPY+ and Serengeti, funded entirely with internal resources, expanding its portfolio in technical luxury and action sports, complementing existing brands like Smith and Blenders.
- Management noted positive signs in late June and July, with North America expected to return to growth in H2, supported by improving customer behavior and D2C performance.
- The company maintained disciplined capital allocation, launching a new buyback program and fully acquiring Blenders, while keeping net debt low at EUR5.4 million.
- Underlying gross margin improved 3.5 percentage points in Q2 (excluding tariff refunds), driven by favorable price/mix, lower dilutive business, and a more favorable sourcing profile.
- The company's premium and luxury brands (Carrera, Smith, David Beckham, Kate Spade) showed resilience in a softer market, and online channels continued to grow, particularly Smith D2C.
- Safilo Group SpA (SAFLF) experienced a mid-single-digit sales decline in Q2, with net sales down 4.5% at constant exchange rates, reflecting a softer demand environment across core markets.
- The company faced significant headwinds in Asia Pacific, with Q2 sales down 17.7% at constant exchange rates, due to a demanding comparison base, soft conditions in China, and the rescheduling of the Xiamen optical fair.
- Blenders brand remained in negative territory, with management acknowledging it is 'still not where it should be' in a difficult environment.
- The company noted that the gross margin benefit from tariff refunds and pricing actions will become less pronounced in H2, as these are now in the base, potentially limiting further margin expansion.
- Europe showed mixed performance, with France and Germany experiencing challenging trading conditions, including a decline in the optical market in France and softness in the Internet pure player channel in Germany.
- The company absorbed lower operating leverage on softer sales, cost inflation, and continued investment behind brands, which could pressure profitability if sales do not recover as expected.
- Net financial charges rose to EUR5.6 million from EUR2.9 million, reflecting a neutral impact from Forex exchange differences compared to a net positive effect in the prior year.
- The company's performance in Rest of World was impacted by the conflict in the Middle East, with sales down 5.1% in Q2, though the region gradually stabilized.
Good evening, and welcome to the Safilo Group first-half 2026 results conference call. This call may contain forward-looking statements related to future events and operating, economic and financial results for the Safilo Group. Such forecasts, due to their nature, imply a component of risk and uncertainty due to the fact that they depend on the occurrence of certain future events and developments. The actual results may, therefore, vary even significantly to those announced in relation to a multitude of factors.
Today's participants are Mr. Angelo Trocchia, Chief Executive Officer; Mr. Michele Melotti, Chief Financial Officer; and Ms. Barbara Ferrante, Director of Investor Relations. I will now pass the call over to Mr. Angelo Trocchia, Chief Executive Officer. Mr. Trocchia, you may begin, sir.
Thanks very much. Good evening, everyone, and thank you for joining us today for the Safilo's first half 2026 results. After a resilient start of the year, the second quarter
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