Safilo Group S.p.A.

Good evening and welcome to the SAFILO Group first half 2025 results presentation. 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 Milotti, 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 so much. Good evening, everyone, and thank you for joining us today to discuss SAFILO H1 2025 results, including a training update on the second quarter. Let me begin by framing the broader context of our performance. Throughout the second quarter, we continue to show our ability to adapt to the multiple layers of uncertainty streaming from geopolitical tension and shifting macroeconomic pressures, particularly those related to tariffs. Despite this challenge and a landscape that continues to change, Our sales performance at concert exchange rates remain solid across key regions, reflecting the strengths of our brand portfolio, our operational agility, and the execution discipline of our teams across markets. Supported by our long-term customer focus, this momentum translated into consistent economic and financial progress, allowing us to deliver one of the strongest semesters in our history. At the same time, we advanced on our strategic agenda, further strengthening our licensed portfolio and our commitment to long-term shareholder value. Turning to the key highlights of the period, in the second quarter, our sales at constant exchange rate continued to grow, in line with the performance we recorded in the first quarter, driven by positive momentum in North America, where the recovery was more marked, and by the resilience of the European market, despite increased market uncertainty, weighing on consumer confidence. Once again, France stood out as one of our leading markets, underscoring its role as a strategic priority. Second quarter trends were substantially a continuation of Q1, also in emerging markets, where Asia remained largely positive, while sales in the EMEA region remained weak. Our results were again underpinned by the strengths of our contemporary and lifestyle brands across our core wholesale channels. From an economic and financial standpoint, we deliver another quarter of significant profits and margin expansion, supported by a series of effective measures which mitigate the negative impact of the U.S. tariffs. Gross margins reached a new high, and we were able to convert much of this improvement into a higher operating performance. Combined with strict working capital management, these results also drove strong cash generation and a significant reduction in net debt. In short, I would say that the balance of our geographic exposure, the quality of our brand portfolio, and our operational discipline continue to sustain our performance through a complex and evolving cycle. With that, I will hand it over to Michele, who will walk you through our results in more detail.

Thank you, Angelo, and good evening to everyone. Let me start with an overview of our total sales performance in the second quarter and over the first half of the year. At constant exchange rate, total net sales rose by 2.3%, substantially in line with the plus 2.2% recorded in the first quarter. Differently from Q1, foreign exchange rates were a significant add-in for our reported revenues, given the approximately 5% depreciation of the U.S. dollar against the euro, which impacted on our top-line translation. So Q2 sales were down 1.1% at current exchange rates. We closed the first six months with net sales of 537.6 million euros, up 2.3% at cost and exchange rate, and in positive territory also at current exchange rate, up 1.1%. From a brand perspective, in the second quarter, momentum remained strong across our core portfolio. David Beckham, Boss, Tommy Seeger, and Marc Jacobs delivered another quarter of WGD growth, while Carrera and Carolina Herrera recorded solid high single-digit increases. Across product categories, prescription frame remained the main positive driver, supported by resilient demand across all key markets. This helped us offset the softer performance in sunglasses, which were influenced by a more prudent consumer spending and persistently promotional environment, especially in the United States. The quarter was overall flat for our store products, largely due to a different phasing of delivery of winter products. We'll come back on this later. Looking at our distribution channels, on half-year basis, momentum remained solid among our independent opticians and retail chains at high single digits, while online sales were moderately positive, stable at around 16% of revenues. What we saw here was continuous strong performance with meet direct-to-consumer channels and sales growth towards inter-nature players, offsetting a subdued performance in Blender's e-commerce business. Turning to our regional performance starting with Europe, second quarter sales were moderately positive by 0.5% at cost and change rates. Sunglass sales remained broadly stable, sustained by solid momentum through inter-nature players, while performance in physical stores, particularly in Italy and Spain, was more uncertain and volatile. Prescription frames fostered resilient low single-digit growth fueled by the increasing adoption of U.N.' 's Afilo B2B platform among independent opticians and retail chains, further strengthening our commercial execution. As highlighted, France confirmed its role as the region's main growth driver, supported by robust demand for optical products both prescription cream and sunglasses and further boosted by our in-store communication initiative. And we saw continued solid results also in Northern and Eastern Europe markets. As a quick note, our sales performance in Europe was also marginally impacted by the consolidation effect from the disposal of Lenti in June. In the first half, our sales in Europe increased by 1.7% in cost of exchange rates, supported by double-digit growth from David Beckham, Tommy Fieger, Boss, and Marc Jacobs, which showed a continued performance across both prescription frame and sunglass collection. Carrera closed the first semester with a very healthy high single-digit growth, while Poroi posted a low single-digit upside, supported by the NAS brand visibility as the official partner of the ATP Tour, particularly during the Madrid and Rome tennis tournaments. Turning to North America, Q2 sales at top of exchange rate rose by 4.8% reflecting the continued recovery of the U.S. market. This performance was led by the double-digit growth in Carrera, David Beckham, Boss, Marc Jacobs, and Carolina Herrera collections, which significantly boosted total prescription frame sales and helped sustain the sunglass category in what remained a challenging market environment. In direct-to-consumer channels, notwithstanding the fact that blenders continue to be impacted by promotion-driven demand, particularly evident in the entry-level price segment, its performance showed some improvement compared to the first quarter. In the second quarter, sales of missed products were held back by our decision to temporarily limit the import of new winter helmets from China following tariff announcements. This move resulted in the deferral of some deliveries to the second half of the year. Zooming out to the first six months, our sales in North America increased by 2.8% at cost and change rate, driven by Smith's high single-digit growth across its core channel and product categories. Notably, Smith closed the winter season 24-25 in North America, further solidifying its market leadership in snow goggles and snow helmets. These combined with solid results from our leading hybrid brand in all sales helped us sustain the region's positive trajectory. Turning to emerging markets, the second quarter presented a mixed picture across regions, shaped by a combination of microeconomic and geopolitical factors. The Pacific continued to make a positive contribution to our performance, with second quarter sales up 11.5% at cost of exchange rates. Momentum remained healthy, especially in China and across distributor-led markets, which continue to show solid demand and engagement across our portfolio. In the first semester, our sales in Asia-Pacific were up 14.7% at cost of exchange rates, so far confirming the region as a steady contributor despite some local volatility. In the period, Tommy Feger, Smith, Margecos, and Levi's were up our top-performing brand in the area. Turning to the rest of the world, in the second quarter, sales were down 5.2% at cost of exchange rate, while in the first half, business was down 3.8%. AMEA market and Latin America showed contrasting dynamics with challenging conditions in the former and more positive trends in the latter. In the Middle East, the region continued to face a combination of political tension and operational restrictions in certain key markets. This disruption affected distributor selling and weighted on overall business visibility, making the operating environment more complex. In contrast, Latin America posted a positive performance in the second quarter, led by a business recovery in Mexico, thanks to a strong performance by Carrera and Carolina Herrera.