Our Strategy
On March 9, 2023, the Board of Directors of Safilo Group S.p.A. approved the Group’s medium-term economic and financial targets to 2027.
In alignment with the strategies previously outlined and effectively implemented over the last few years, the Group will continue to pursue the following main objectives:
Sales growth with a balanced business portfolio by brand, geographical area and distribution channel, which maximizes customer service and meets the needs of the different consumer segments.
Margin expansion behind further improvement in the gross margin, and operational leverage.
Positive cash flow generation that feeds and supports the Group's organic and external growth.
The Group’s strategies will continue to leverage two main enablers:
The end-to-end Digitalization of its business model, with the aim of transversally enhancing data analytics, optimizing processes, operations and time to market.
A Sustainability roadmap in support of the Group’s business targets, driven through an agenda of clear and shared objectives.
“Starting from 2019, Safilo has embarked on an ambitious strategic turnaround journey to re-establish the Group as a healthy and competitive player in the attractive eyewear sector. We are proud of the effective progress made so far by Safilo, notwithstanding challenging years of global health and economic crises which have required us to face reality with great pragmatism, often making difficult choices.
We look to 2022 as the year in which we completed our first, fundamental turning point, fully overcoming important portfolio challenges thanks to a particularly strong organic growth, especially of our main home brands, the acquisition of two American brands in 2020, which have also allowed us to strengthen our digital business and capabilities at a crucial time in the market, and thanks to the entry of new license partnerships. …
Thinking now ahead, while we maintain a cautious approach to the current year, which began in the wake of concerns regarding consumption trends in an uncertain and potentially volatile macroeconomic environment, we are, on the other hand, confident of the Group’s medium-term growth prospects.
A new chapter in our story has begun, a new phase of development that will continue to leverage the multiple drivers underpinning the long-term growth of the eyewear sector, and build on the main strategic choices we initiated 4 years ago. Our medium-term ambitions therefore remain focused on our strong brand portfolio to effectively reach a broad audience of target consumers, powered by the sustained growth of our home brands, to be achieved organically but also via new acquisitions, and complemented by a diversified set of licensed brands.
It will be essential to continue to maintain a balanced business, aiming for a home brands portfolio that by 2027 accounts for more than 50% of our revenues and that decisively shapes the development of our geographical and distribution channel mix. For this reason, in the coming years, we expect more significant growth in North America and emerging markets, just as we expect our business to grow more in the sports channel dedicated to outdoor products, and in all the online channels that we have successfully developed in recent years, from B2C to revenue through internet pure players, to our innovative B2B platforms which will continue to put our Customer First.
Our portfolio strategies will keep leveraging two main enablers of growth. On the one hand, the 360° digital transformation, which we accelerated already last year to equip the company with the latest technologies in terms of business intelligence and data analytics, and which will see us further investing in particular in the coming two years. On the other hand, our growing commitment to developing a sustainable business. Also on this front, 2022 represented a year of important results, thanks to a reduction of around 46% in scope 1 and 2 CO2 emissions compared to 2021 and of around 57% compared to 2019, and new investments in photovoltaics and renewable energy. Starting from these achievements, today we want to set our medium-long term sustainability goals and objectives.”
Angelo Trocchia, Safilo Chief Executive Officer
MEDIUM TERM TARGETS AND SUSTAINABILITY OBJECTIVES
Sales Growth
Group net sales are expected to reach approximately Euro 1.3 billion in 2027, with a 5-year CAGR of around 4% driven by a sustained growth of home brands, which are expected to exceed 50%4 of Group revenues by the end of the plan. In line with the dynamics that have characterized the top line development and turnaround in recent years, Smith, Carrera, Blenders and Polaroid will represent the main drivers of future growth, leveraging their proven design and product innovation capabilities along with a progressive and targeted strengthening of marketing investments, especially in digital channels. Further growth of the home brand business is also expected to derive from the acquisition of one or more brands assumed to contribute for around 1% of the Group’s foreseen compounded annual growth rate. The Group will also maintain a great focus on the dynamic development of the licensed portfolio through a careful balancing and accurate diversification of brands based on their market positioning and relative size, with the aim of maximizing Safilo's product offer on the various consumers segments, while limiting its exposure to any single brand. The above-mentioned developments of the brand portfolio are also expected to continue driving the geographical mix, with the Group which will continue focusing on its strong presence in North America and Europe, and on the opportunity for emerging markets to become a more significant share of the business. Net sales are also foreseen to grow more through the new online, B2B and sport channels that the Group has successfully developed in recent years, while maintaining a strong focus on customers playing in its historic core distribution channel.
Our Strategy for a balanced portfolio – see slides
Medium-term targets - see slides
DELIVER MARGIN EXPANSION AND POSITIVE FREE CASH FLOWS
The adjusted EBITDA margin is expected to reach between 12% and 13% of the Group’s net sales by 2027, mainly thanks to a further improvement in gross margin driven by a richer sales mix and additional cost optimization.
While, on the one hand, the Group will increase investments in marketing to support the growth of home brands and will concentrate the most significant part of digitalization investments over the coming two years, on the other it is expected that the operating leverage will remain under control thanks to a tight management of overheads expenses and fixed costs.
A positive free cash flow throughout the entire Plan period, thanks to the constant improvement of the Group's operating result and a more moderate cash absorption from net working capital, while annual CapEx is expected to be around Euro15-20 million.
Medium-term targets - see slides
MEDIUM-LONG TERM SUSTAINABILITY TARGETS
Following Safilo’s entry into the Fashion Pact and the numerous projects initiated during recent years on the different Sustainability fronts, which, in 2022, contributed to the achievement of significant results, in particular regarding Scope 1 and 2 CO2 emissions, market based, with their reduction by around 46% compared to the previous year and by around 57% compared to 2019, the Group’s medium-long term main sustainability targets are:
Emission Reduction: Scope 1 and 2 CO2 emissions -70% by 2030 and Scope 3 CO2 emissions -20% reduction by 2030, and bringing Renewable Energy to 100% of the Group’s needs by 2030.
Packaging Optimization: Zero problematic plastic and remaining plastic >50% recycled by 2025.
Sustainable Innovation: Sustainable New Eyewear Collections >25% by 2025.