MILAN — Safilo returned to growth in the first quarter of the year and delivered an improvement in profits and margins.

Europe was the main positive driver, a market which chief executive officer Angelo Trocchia defined as the “most balanced and resilient growth engine, the region where our innovation and customer focus align most effectively,” and North America showed a recovery thanks to sport and prescription eyewear.

Smith, Carrera, David Beckham, Polaroid, Tommy Hilfiger, Carolina Herrera, Boss, Hugo and Marc Jacobs led the performance.

In the three months ended March 31, the Italian eyewear group registered a 3.1 percent increase in sales to 285.8 million euros, compared to 277.2 million euros in the same period last year.

Gross profit grew 4.1 percent to 173 million euros and adjusted earnings before interest, taxes, depreciation and amortization was up 7.3 percent to 34.3 million euros.

As reported, last year, Safilo revenues were impacted by the end of the license with Jimmy Choo and were down 3.1 percent to 993.2 million euros.

“The start of the year has confirmed our group’s ability to perform with resilience and focus despite a market environment that remains uncertain and complex,” said Trocchia. “We enter 2025 with encouraging momentum. January in particular started on a solid note, with North America showing signs of renewed traction after a promising end of last year.” However, this momentum was tested as the quarter progressed, with geopolitical tensions “and above all, the escalating trading dynamics.”

As was to be expected, during a conference call with analysts on Wednesday at the end of trading in Milan, Trocchia and chief financial officer Michele Melotti were pummeled with questions about President Trump’s tariffs and trade policies, which led the CEO to explain that mitigation measures included an acceleration of Safilo’s supply chain diversification, and selective price adjustments in the U.S.

“As of the start of the second half, our sourcing from South East Asia will increase substantially, reducing the company reliance on China,” said Trocchia.

The goal is to bring China-sourced production “below 40 percent within the next 12 months. At the beginning of the year, the volume coming from China was around 70 percent, 10 percent from North America, 10 percent from Italy and 10 percent from South East Asia. Additionally, we are evaluating an expansion of our U.S. manufacturing footprint with the potential increase in capacity at our existing facility in Utah. This move will support the growing demand for Smith goggles, while further strengthening domestic production capabilities. The factory is already there, so it’s an issue of optimizing what we have, but there is no rush, we will see, depending on the events.”

As part of the the diversification of the supply footprint in Asia, key countries involved are Vietnam, Thailand, Philippines and Cambodia, said Trocchia. “There are no disadvantages, those countries are competitive. The work on the differentiation of the supply chain started some years ago and obviously now we are building and accelerating.”

Safilo is also currently limiting import “as much as possible, relying on the existing stock enough for four and five months. I don’t see issues of availability of product in the second half.”

Consumer Sentiment

“In the current environment, visibility on the business remains limited, and particularly in North America, uncertainty continues to represent the key hurdle to market recovery, while we keep seeing a positive trend in Europe overall,” Trocchia continued.

He spoke of “two fundamental question marks — what’s going to happen in terms of consumer demand, how is the consumer going to react to this level of uncertainty and to a certain level of inflation” in the U.S. “We see some some tension in the consumer behavior in North America. There are two killers for consumer behavior. One is the uncertainty and the other is inflation, so I will not say that tariff is not our headache, but obviously the consumer behavior is something we need to really understand in the next months. The strength of the brand is a crucial element.”

Price Increases

Melotti said “we are planning to make some some targeted price adjustment. We are currently foreseeing the adjustment only in the U.S. market, so we are not planning an intervention in other geographies.”

“We’ve been talking about selective price increases on some categories; on some others we are ready but we will keep the maximum flexibility to understand what’s going to happen on the tariffs and then eventually retune what our strategy is going to be. “

Markets

In the first quarter, sales in North America rose 3.8 percent to 118.8 million euros, boosted by the strong performance of Smith’s winter sports products, which benefited from a favorable ski season. Tommy Hilfiger, Carrera, David Beckham, Carolina Herrera and Marc Jacobs were once again key growth drivers in the market.

Blenders “had a difficult quarter, still impacted by more promotional, competitive market environment in the entry price level. Blenders is not yet where it should be,” said Trocchia. As reported, the brand’s Chase Fisher last month stepped down from his CEO role, succeeded by Jack Gray.

In Europe, revenues were up 2.9 percent to 128.9 million euros, where Tommy Hilfiger, Marc Jacobs and Boss delivered the strongest progress. Trading remained particularly dynamic in France and Eastern Europe. The independent opticians channel recorded solid growth also in Italy, Spain and Germany.

In Asia and Pacific, sales climbed 21.2 percent to 14.4 million euros, lifted by Carrera’s good progression in Australia, thanks to effective co-branding initiatives, for example with cricketer champion Pat Cummins, and the rollout of the women’s collection.

In the rest of the world, sales fell 7.4 percent to 23.7 million euros impacted by weakness in the Indian and Mexican markets, while the sales performance was positive in Middle Eastern markets and in Brazil.

Free cash flow reached 14.4 million euros, compared with 1.7 million euros in the first quarter last year, boosted by “a solid operating performance and effective management of working capital driven by inventory normalization,” said Melotti.

As of March 31, the group’s net debt decreased to 68.4 million euros from 82.7 million euros at the end of December 2024.