Safilo Margins Surge Despite Soft H1 Sales

Italian eyewear giant Safilo has reported a sharp lift in profitability for the first half of 2026, even as sales slipped amid cautious ordering from opticians and retailers across its core markets, including a double-digit sales drop in Asia Pacific.

The Padua-headquartered group, whose stable includes Carrera, Polaroid, Smith, Kate Spade New York and the perpetual Eyewear by David Beckham licence, told the market on Tuesday that net sales for the six months to June 30 came in at €512.0 million (approximately A$839 million), down 1.9 percent at constant exchange rates and 4.8 percent at current rates against the same period last year.

The softness was concentrated in the second quarter, when net sales fell 4.5 percent at constant currency to €239.1 million (around A$392 million) as customers in Safilo's core markets grew more cautious about placing orders from late March through May. Sunglasses bore the brunt of the pullback, reflecting their more discretionary nature, while prescription frames also lost some momentum. Trading conditions improved somewhat in June, a trend the group said carried into the early weeks of the third quarter.

Margins jump on tariff windfall and price/mix gains

Despite the top-line pressure, profitability improved markedly. Gross margin for the half rose 6.1 percentage points to 67.2 percent, while adjusted EBITDA margin climbed 5.2 points to 16.8 percent, with adjusted EBITDA up 38.1 percent year-on-year to €86.0 million (about A$141 million).

A significant share of that improvement came from a one-off benefit: following a February 2026 US Supreme Court ruling on IEEPA tariffs, Safilo received US Customs and Border Protection refunds of €22.2 million (roughly A$36 million) on duties previously paid, with €20.0 million (about A$33 million) recognised through the profit and loss statement. Strip that out, and adjusted EBITDA margin still improved to 12.9 percent, up 1.3 points, which the group attributed to favourable price/mix and continued cost discipline.

Adjusted group net profit rose 46.7 percent to €49.4 million (around A$81 million).

Regional picture: Australia a bright spot as Asia Pacific struggles

By geography, North America which is Safilo's largest market, held up better than Europe on a constant-currency basis in the half but posted the steepest quarterly decline, with Q2 sales down 4.4 percent at constant rates to €95.9 million (about A$157 million), driven by weakness in the independent optician channel. Department stores and premium-brand demand offered some offset, particularly in June.

Europe eased just 0.5 percent at constant currency for the half, with softer trading in France and Germany offset by growth in Italy, Turkey and Poland. Rest of World sales fell 5.8 percent, still affected by the Middle East conflict, though Safilo noted improving conditions in India.

Asia Pacific was the weakest region, down 15.8 percent at constant currency for the half and 17.7 percent in the second quarter, hurt by a tough comparison against a strong 2025 and the rescheduling of the Xiamen optical fair into June, which dented customer attendance. Bucking the regional trend, Safilo said Australia continued to deliver positive results, supported by solid contributions from Smith and Carrera.

SPY+ and Serengeti deal completed, buyback under way

Safilo used its stronger balance sheet to fund strategic acquisitions from its own resources during the half, including €21.5 million (about A$35 million) toward the purchase of sport and outdoor eyewear brands SPY+ and Serengeti from Bollé Brands — a deal signed in May and completed on July 1 plus a further €6.3 million (roughly A$10 million) to acquire the remaining 20 percent of Blenders, taking that brand to full ownership.

Net debt fell to just €5.4 million (about A$9 million) at June 30, from €46.1 million (around A$76 million) at the end of December, with the group in a positive net financial position of €29.6 million (about A$49 million) on a pre-IFRS 16 basis. Free cash flow for the half totalled €36.4 million (roughly A$60 million).

The group also launched a share buyback programme in June; as of July 31 it had repurchased 3.2 million shares, taking total treasury holdings to roughly 6.13 percent of outstanding shares.

Outlook

CEO Angelo Trocchia said the quarter had tested the business but that disciplined execution, favourable price/mix and cost control had delivered "another quarter of solid margin expansion and strong cash generation." He pointed to early signs of stabilisation heading into the third quarter as grounds for cautious optimism about the second half, while cautioning that the overall demand environment remains challenging.