Safilo Group S.p.A. (SFL) Earnings Call Transcript & Summary

Good evening, and welcome to the Safilo Group Full Year 2024 Financial Results. 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. Good evening, everyone, and thank you for joining us today to discuss Safilo's full year 2024 performance. As we all know, 2024 was a year shaped by economic uncertainty, geopolitical tensions and shifting consumer behaviors. The eyewear sector was not immune to these challenges as market conditions weighed on demand across different regions. Despite this, we proved our resilience and flexibility, successfully navigating market headwinds and consolidating our competitive edge. We achieved this by leveraging dynamic brand portfolio management, making targeted investments and maintaining a steadfast dedication to the quality of services, both for our customers and consumers. Today, I will walk you through our key business highlights, followed by an update on our sustainability progress, then leaving Michele to guide you through the details on our sales, economic and financial performance for the full year. Turning now to the highlights for 2024. Let's start with our top line performance. Our total sales declined by 2.3% at constant exchange rate, a result that reflects the combination of still unfavorable market dynamics in North America and the impact of concluding the Jimmy Choo license, 2 headwinds, which were mitigated by the continued positive performance of Europe. If we exclude the effect of the license phase out, our sales trend was slightly positive, thanks to the combination of our key growth drivers, in particular, Carrera, David Beckham, Tommy Hilfiger and Carolina Herrera. Now while the revenue environment remained challenging, we saw clear progress on our profitability metrics, driven by the improvement of the gross margin, which reached nearly 60% of sales, reflecting the increased efficiency of our industrial footprint and an effective pricing strategy. From a financial perspective, we also demonstrated solid cash generation with a cash flow from operating activities, which exceeded EUR 70 million. This allowed us to support key investments, namely the acquisition of the perpetual license for the eyewear by David Beckham, a strategic move that significantly strengthens our own brand portfolio, which, as a result, now represent approximately 50% of the total revenue. Last year, we also substantially completed the long-term stabilization of our license portfolio. These involved the early renewal of BOSS HUGO and Marc Jacobs, alongside the continuation of our important partnership with Moschino, Missoni and Levi's. Building on this momentum at the beginning of this year, we successfully renewed Under Armour and Dsquared2. As a result of all this work, we have now secured roughly 80% of our license portfolio through 2030 and 2031. Building on these business highlights, I would now like to focus on the performance of our key home brands, which continue to be a central pillar of our strategy, demonstrating both resilience and growth potential despite a market environment that remained challenging. On one hand, we saw strong tailwinds driven by successful distribution expansion, solid consumer demand for optical frames and brand equity reinforcement in key markets. On the other, we faced headwinds from weather-related impact on sunglasses, a soft sport business environment and more cautious wholesale purchasing trends. Let's talk about Carrera. Carrera was a standout. We saw double-digit growth in both Europe and North America, and it's exciting to say that the U.S. is now Carrera's #1 market, a testament to its growing global appeal. What's really resonating is the Carrera women collection. It's been incredibly successful, and we have seen strong performance across both optical and sun categories. And of course, I want to highlight the Carrera Ducati collection. It has continued to perform very well. We have seen strong interest from the sports enthusiast and fashion forward consumer. The quality of the collection and the brand recognition has been a winning combination, demonstrating the brand receptivity and strength in diverse market segments. If we move to Polaroid, Polaroid faced a bit of a challenge with the sun season in Europe delayed by adverse weather conditions in May and June, which impacted early summer sales. Despite the challenges, Polaroid managed to close the year with only a marginal slowdown, thanks to a strong recovery in the fourth quarter. This rebound was mainly driven by the optical business, but sunglasses were also moderately positive, signaling improving momentum heading into the new year. Last year, Blenders had a very challenging quarter 4, largely due to a tough comparison with the same period of 2023, which had been boosted by the success of its first collection in collaboration with Coach Prime. On the other hand, in 2024, Blenders continued to expand its off-wholesale network as we kept progressing with the brand's omnichannel strategy. Recently, we have observed intensified price competition in Blenders market segment, prompting us to react more swiftly. Let's talk about Smith. Smith also experienced its specific headwinds, impacted by lower winter preorder and the soft summer bike business, reflecting broader challenges in the sports and the outdoor sector. However, its direct-to-consumer channel remained robust, and we saw a strong Q4 rebound driven by a positive start of the 2025 ski season. So also in Smith's case, we had a moderate overall slowdown due to this market fluctuation, but the brand continued to reinforce its strong competitive position. And to finish, let's talk about David Beckham. David Beckham, which had another phenomenal year. We achieved high double-digit growth across Europe, North America and Middle East, driven by strategic distribution expansion. It's been great to see the brand benefit from a real well-balanced product mix with both optical and sun collections contributing significantly to its success. Before handing over to Michele, I would like to brief you also on our sustainability journey as 2024 was a year of significant progress on this front. One of our biggest achievements was further reducing our environmental impact. By the end of the year, 95% of our electricity consumption was covered by renewable sources, up from 90% in 2023. This milestone helped us achieve a 19% reduction compared to 2023 in Scope 1 and Scope 2 emissions. At the same time, we made important advancement in sustainable products. Last year, the share of new collections made by recycled or bio-based material increased to 23%, up from 17% in 2023. And for some of our brands, this percentage was even higher, over 90% for Polaroid and more than 40% for Boss, Tommy Hilfiger and [indiscernible]. These results, together with upstream value chain improvement initiatives helped reduce Scope 3 emissions by 5% compared to 2023. Behind environmental impact, we remain strongly committed to social responsibility. We marked 20 years of partnership with Special Olympics, a collaboration that we have now extended through 2027, reaffirming our commitment and dedication to inclusion, accessibility and eye health. And Polaroid's participation in the global Love Your Eyes campaign promoted by the International Agency for the Prevention of Blindness is another example of our role in advancing vision care and accessibility. We know there is still more to do. And as we move forward, we will continue embedding sustainability into everything we do. And now I would like to hand it over to Michele.

Thank you, Angelo, and good evening to all of you. Let's take a closer look at our sales performance for 2024. We closed the year with a total net sales of EUR 993.2 million, down 3.1% at current exchange rate and 2.3% at constant exchange rate compared to 2023. In Q4, sales performance improved compared to the previous quarter of the year, recording a contraction of 1.6% at current exchange rate and 1.1% at constant exchange rate. As highlighted by Angelo, our full year revenue performance was slightly positive, excluding Jimmy Choo, while it was positive by almost 2% in Q4. Our underlying sales performance reflects a mix of dynamics across different markets and product categories. Europe remained our strongest performing region with independent optician and chains proving to be our most resilient sales channel. Within our product portfolio, prescription frame continued to outperform sunglasses, reflecting steady positive consumer demand for optical products across all regions. Our online business remained solid around 16% of sales, driven by 2 diverging trends. On one side, we saw particularly strong performance for direct-to-consumer channel, while Blenders faced a softer year due to the tough comp I've just discussed. Looking at our European performance, we closed the year with sales up 1.6% at constant exchange rate after recording a flat performance in Q4. Excluding the impact of the Jimmy Choo phaseout, full year sales in Europe grew mid-single digit with Q4 up around 3%. France was one of our best-performing markets, supported by an expanding commercial network and strong demand for prescription frames. Italian market was moderately positive, while Eastern European market posted strong results, in particular, Poland and Turkey. Last year, Germany was also an important positive driver for us, benefiting from the growth of the Internet pure player clients. The market decelerated in Q4 as the business environment became more uncertain. A key driver of our success in Europe was the continued expansion of our You&Safilo B2B platform, which has now been adopted by more than 28,000 clients, helping us to improve efficiency and strengthen relationship with our partners. Among our brands, Carrera and David Beckham delivered the strongest growth, while among our licensed brands, Carolina Herrera and Dsquared2 led the way along with the successful launch of ETRO eyewear collection. Turning to North America. Sales were down 5.2% at constant exchange rate with a similar trend in Q4 contracted by 4.6%. Excluding Jimmy Choo, North America remained slightly negative, penalized by an election year and the climate of uncertainty that affected business and consumer confidence. We already commented on how throughout most of the year, we faced an unfavorable sports business environment, which impacted Smith's performance. As you may remember, last year, we had a delayed start to the 2024 ski season, which limited restocking. Then the spring/summer season saw the bike segment still somehow overstock at retail level. On the other front, sunglass sales remained largely weak to cautious purchase behavior from the wholesale channel, while prescription frames continued to show solid growth, supporting the brands with greater exposure to this category. As a matter of fact, Carrera, David Beckham, Tommy Hilfiger and Marc Jacobs performed well, supported by strong collection, favorable product mix and expanded distribution. Q4 was mainly affected by the drop in sales of Blenders and by the still subdued sunglass business in the wholesale channel, which nevertheless showed sign of improvement towards the end of the year. As said, on a positive note, Smith continued to progress in its B2C channel and saw a recovery in physical stores, supported by a strong start to the 2025 ski season and a favorable comparative base. In Asia Pacific region, full year sales declined by 2.1% at constant exchange rate, recovering most of the drop accumulated during the first 9 months, thanks to a strong rebound of plus 12.9% recorded in Q4. China was a standout performer, continued to gain traction as one of our key growth markets. The strong reception of our collection at major optical sales in Shanghai and Beijing helped to stimulate demand and reinforce our brand positioning. In China, Polaroid, Tommy Hilfiger and Ports were the brands driving our growth in the region. By contrast, in the Southeast Asia, distributor sales contracted over the first 9 months of the year, affecting the overall performance. Finally, Q4 rebound was driven by China, which regained speed after its temporary slowdown in Q3 and by a nice recovery of Southeast distributor. In the Rest of the World region, the year closed with a decline of 5.9% at constant exchange rate, showing a mixed trend across markets and regions. In Latin America, Travel Retail was a weak spot affecting overall sales. However, Brazil showed sign of recovery in Q4, helped by more stable domestic demand. Last year, sales in Middle East grew, driven by the positive progress by Carrera, Tommy Hilfiger and David Beckham, while India saw some deceleration after a period of strong growth in 2023. Q4 saw some recovery with sales up 2.4% at constant exchange rate, while the currency environment was particularly unfavorable with the significant weakening of the Mexican peso and the Brazilian real, which affected the overall LatAm performance at current exchange rate. Turning to our economic performance. In 2024, we made another significant progress in improving our gross margin. For the full year, gross margin reached 59.7% of sales, an improvement of 250 basis points compared to the reported gross margin in 2023, a year impacted by the restructuring of the Italian footprint, while the improvement stood at 100 basis points compared to the 2023 margin adjusted for related restructuring costs. Throughout the year, the key driver of our gross margin improvement was the increased efficiency of the supply chain following the restructuring of the Italian footprint we completed in Q4 2023, along with a positive pricing effect. Sales mix was instead a headwind in the year, affected by the dilutive impact of the phase-out business, while in Q4, we had an unfavorable channel mix due to the lower contribution of Blenders D2C channel and higher contribution of Sports shop. For this reason, our Q4 gross margin at 59.5%, stable compared to Q4 2023 adjusted margin was a very solid result. At the operating level, our adjusted EBITDA reached EUR 93 million, up 1% compared to the adjusted EBITDA in 2023, while the margin improved by 40 basis points to 9.4% reflecting our disciplined approach to cost management, we partially countered sales pressure on the operating leverage with some persistent cost inflation. A key factor behind this was the normalization of IT investment following elevated spending in 2022 and 2023 to accelerate our digital transformation. On the other hand, last year, we continue to strongly support marketing investment, which remained high and heavily digital oriented. In Q4, our adjusted EBITDA margin also saw an uplift at 7.5% of sales, marking the strongest progress versus the previous year with a 60 basis point improvement, driven by disciplined spending on selling expenses and improved operating leverage. Moving to our adjusted net result. We closed the year with EUR 34.2 million from EUR 14 million in 2023. Excluding the effect of the valuation of the option liability on minority interest, our adjusted net performance improved by approximately 17%, also supported by the 15% decline of net financial charges, which reflected lower interest rate and the reduction in gross debt. Finally, looking at our cash flow and net debt position, 2024 confirmed our financial solidity and ability to generate cash. In Q4, free cash flow reached EUR 18.9 million versus EUR 13.3 million in Q4 2023, bringing the free cash flow for the year to EUR 16.7 million. This was characterized on the one hand by the significant improvement in cash flow from operating activities, which totaled EUR 76.2 million, reflecting our good economic results and an efficient net working capital management, primarily driven by the reduction of inventories. On the other hand, cash flow for investment grew to EUR 48.9 million from EUR 8.6 million, mainly due to the investment to acquire the perpetual license for eyewear by David Beckham. Last year, despite the acquisition of the perpetual license and the completion of our share buyback program for EUR 11.8 million, we managed to maintain our net debt stable at EUR 82.7 million, while declining by around EUR 3 million pre-IFRS 16. Our financial leverage remained healthy at 0.48x, ensuring we have the flexibility to continue investing in our growth priorities. With that, I'll hand back to Angelo.

Thanks, Michele. As we look ahead, the complexities of the macroeconomic and geopolitical landscape marked by escalating challenges will continue to influence market, shaping how we do business and making it particularly difficult to predict how trends will evolve in the coming months. As noted earlier, towards the end of last year and into January, we began seeing signs of recovery in North America's wholesale channels, while February benefited from a strong winter season for Smith. March as our most significant month in Q1 will provide valuable insight into market sentiment and consumer confidence. In this context, we remain focused on strengthening our partnership, staying agile and maintaining operational flexibility with the goal of sizing opportunities to drive a return to revenue growth. Our commitment to continuous margin improvement and consistent cash generation remains steadfast, ensuring the efficient allocation of resources and making strategic investments that drive long-term value creation. It is precisely with this objective in mind that at the end of last year, we also decided to conclude 3 minor license agreements, which together accounted for approximately 1% of the total sales. Our focus on our home brands has never been sharper, and we are particularly excited about the major brand initiatives and campaigns already in motion for this year. On Carrera, following last year's highly successful launch, Carrera women will be a major priority also in 2025, further expanding the brand's reach and capitalizing on its strong momentum within this segment. And 2025 sees the launch of the new Carrera Sport collection, which reaffirms the brand's bold authentic identity in the world of sport. This collection extends the brand iconicity to a broader audience, the fashionable in sports, whose active lifestyle don't mean compromising on style. Additionally, we continue to build on Carrera's strong momentum by focusing on key geographies with a particular emphasis on North America, where the brand had an amazing 2024. We are also proud to share an exciting milestone for Polaroid, our recent announcement as the official eyewear partner for ATP Tour for the next 3 years. This is a huge opportunity to bring the brand to a fully global stage, helping us connect with new customers and grow our presence worldwide. As part of this partnership, Polaroid will be front and center in some of the biggest tournament, namely the Mutua Madrid Open, the Internazionali BNL d'Italia, and the Swedish Open. Benefits include prominent brand visibility, dedicated activation space in fun zone and a notable presence at kids activities on site. We are also delighted to have signed Lorenzo Musetti, currently ranked in the ATP Top 20 and an Olympic Bronze Medalist, as the ambassador of this partnership and the face of the 2025 Polaroid Eyewear global campaign. His talent, passion and style perfectly embody the Polaroid spirit. 2025 will be another year of strategic development also for David Beckham. Our storytelling journeys continue with this new advertising campaign set against the stunning backdrop of Morocco and featuring David once again to reinforce the brand identity. We are also expanding the brand distribution footprint following the success last year of the eyewear by David Beckham Selfridges pop-up store in London, the luxury department store is now scaling up with 2 additional pop-up store locations in Manchester and in Birmingham. Even more exciting, we are launching for a prime customer of ours, the first eyewear mono-brand store by David Beckham in the heart of Mykonos Town, an exclusive destination with a global audience. These are some meaningful examples of how we want to channel resources into what truly matters, ensuring our brands remain at the forefront of the industry. Finally, as you will have read in our press release, we have today decided to proceed with the new buyback program for 15 million shares, equally approximately 3.6% of our share capital. This plan represents a strategic step aimed at an efficient management of our financial resources while maintaining flexibility in order to seize any future investment opportunities, a matter on which we remain constantly focused and active. This concludes our presentation. Thank you for your time, and we are now ready to open the Q&A session.

[Operator Instructions] The first question is from Oriana Cardani of Intesa Sanpaolo.

The first one is on gross margin. What is your expectation for this year? Do you see room for expansion? The second question is on the evolution of marketing expenses. Do you expect them to increase as a percentage of sales this year? And the third question is on the growth profile for sales this year. What is the size of price/mix effect that you expect in 2025?

I'll start with the first one on the margin. Of course, as you know, we don't provide specific guidance on this. But of course, our aim is to continue bringing to the operational level as much as possible the improvement that we will achieve at the gross margin level, plus, of course, some better support from the operating leverage. And overall, of course, we are still aiming to continue to support and improve our profitability. On the marketing...

Yes. On the marketing, I think, first of all, I think this year is going to be a year in which we will be managing any kind of investment in cost in a very, very tight way because the uncertainty which is around is pushing us to manage like that. As a principle, we are ready to catch any opportunity, mainly investing, as I was expressing before, behind our main brand. So there is a full-fledged advertising plan, quite aggressive behind Carrera, behind the Smith, behind David Beckham, behind Polaroid, somehow behind Blenders. But we are ready to retune and the fact that most of our investment is digital, we can retune in a very fast way according to what we will see is going to happen on the market. Just as a reminder, I mean, our marketing spend today is already quite high. So it's not an issue of increasing so much. It's more an issue to optimize and very fast in reacting when we see what's going to happen behind the priority brand.

Yes. On price/mix, we continue to manage actively our pricing. We do see opportunity to continue managing actively our pricing strategy. Definitely, this year, we will see a better support from mix as we will not have as this year, some negative contribution brand effect on the phaseout of the Jimmy Choo closeout sales. And yes, that's on the pricing.

The next question is from Niccolò Storer of Kepler.

Three for me as well. The first one is on Europe. If you can comment a bit on entry speed into 2025 in Europe, considering the slowdown you have experienced in the last part of 2024. Second question is on working capital. If you can tell us if you see further room for improvement? And if yes, from where? And the last question is on tariffs. What's the current situation? And how are you dealing with those?

So I answer to the question on Europe. I mean, Europe has started well. I mean, obviously, Jan and Feb, they have the weight that they have. As I was saying before, we need to really wait for March because March is a pivotal month for the quarter. But Jan and Feb, Europe has been performing well, where France, Central Eastern Europe performing better than Germany, where Germany, we see some sign of softness. So we just need to wait now March, but the beginning of the year in Europe has been so far, so good.

Yes. On working capital, our goal is to maintain firm control over the working capital. We do see additional opportunities both on the inventory side and on the DSO. And this should enable us also to minimize eventually any working capital absorption also in a top line scenario that should resume growth. On the tariffs, we are closely monitoring the evolving stance on the U.S. administration on the incremental tariffs imposed on Canada, Mexico and China. Our goal is to proactively manage the risk as effective as possible, ensuring that all necessary mitigation measures are in place. In the last year, we have started to diversify our supply chain also out of China. So we are better positioned compared to a few years ago. Mitigation measures are work in progress, negotiation with our supplier already started and commercial actions are the other important lever that need to be defined to counter target. The ultimate impact will highly depend on how the topic settles, so potential exception, competitive reaction. We are closely monitoring the development to refine our projection forward. At this stage, it's really premature to provide a quantification of the overall impact for us.

The next question is from Cedric Lecasble of Stifel.

I have 2. The first one is on the U.S. demand per segment. You've had some areas of strength and prescription sun has been slower. Players today mentioned volatility in the market and a volatile consumer. Can you maybe tell us a little more on what you've seen versus last year's trends? And is there any chance that the U.S. market turns positive this year? Or is it too premature? And the second one is more on the phasing given your launches and your strategic plan. The phasing of the quarters during the year, do you expect a stronger second half? Or do you expect kind of normative growth rate along the year? How do you see the year in terms of quarters?

Okay. So I'll start from U.S. I mean, towards the end of last year, so in Q4, we observed an initial uptick in the wholesale demand in North America. So signaling somehow a potential recovery in that channel. January was also a positive month, followed by a normalization of February. So Q4 Jan and Feb, positive sign. Now the question is, is March where, I mean, we have some first signs that of an American consumer, which with this level of uncertainty is becoming more nervous. So we need to see now March. But end of last year and Jan have been showing some positive signs. Now the question mark is all these discussions and this uncertainty, are they going to have a negative impact on making the American consumer more nervous? I think to be honest, in the next 2, 3 weeks, we will know more out of that. With the question, I think, was H1, H2. Honestly, I mean, the year has been designed to have a strong start of H1 mainly on our brands. Then one element on top of the uncertainty that, to be honest, no one of us can control. Here, the real one big question mark is last year, May and June, if you remember, the weather definitely was not good and the sun has been suffering. So last year, we had a very positive optical and negative sun. So theoretically, May and June should be the period where we may have some upside compared to last year if the season is going to be better. This is if we look to the external market. If we look internally, and I hope really last time we are referring to that is that just like to remember that in Q1, still we have some Jimmy Choo, Q1/Q2, we have some Jimmy Choo effect. But this is an internal element that somehow you need to take into account. But from the market, we've been starting very strong Q1, Q2 and Q2, May and June, we should have, compared to last year, upside on the front, obviously, if the season will come in.

The next question is from Cedric Rossi of Bryan Garnier.

I have 2 questions. The first one is regarding Carrera. So you tried during several years to crack the female customer base and the U.S. market. And it seems that you were successful in these 2 segments last year. So I was curious to have your view on what has changed in the strategy to be successful there? And the second question is regarding David Beckham. So I was surprised to learn that you will open the first store in Greece. So does it mean that we could have further store openings in the coming years and especially in the U.S.?

Okay. I'll start from the second one. Just to be clear, the shop has been opened by one of our long-term strategic customer. The shop is going to be David Beckham, but it's going to be owned by this guy, not by us. So we don't have plan to open own retail shop on David Beckham. Only the location is in Mykonos, so it's going to be huge, attractive and a strong contribution to the brand building of the brand itself. So just to be clear. But there are no idea on expanding in retail with David Beckham. It's growing already like this in us, so it's okay for the next years. On Carrera, but look, Carrera is a journey. We started some years ago. We have repositioned the brand. I mean the Carrera position now, I think we got to a much more clear positioning, before was a little bit of a confusion. Today, when we look to Carrera, we talk about the core of Carrera that we have repositioned in a less extreme Carrera old bold style. So this has been a repositioning of the full brand. And in the light of this repositioning of the brand, the women, it makes a lot of space because already today, 30% of the consumer of Carrera were female, but they were really happy and happy on the execution. So the fact that thanks to the new position, which is a little bit less bold, is a little bit less extreme is allowing women to fit more with the brand. And the women collection is an amazing collection that's been got very fantastic. It has been received fantastic last year. And to be honest, the first data of Jan and Feb are showing that it is the right show. So it's answer to your question is a combination of having repositioned the full Carrera brand, less a little bit less boldish, little bit more American, if you like, but with the women, which was already there, but now has the way to express themselves more. So the Carrera pillar will be core, women and sport. And looking to North America, the 2 main pillar will be core, core and women, less sport because the sport is more a fashion of sport, which fits more for Europe. And then you have the Ducati just which can be an opportunity next year, we're going to have 3 races in North America. So that is opening up additional opportunity on Carrera North America.

The next question comes from Andrea Bonfa of Banca Akros.

Some of my questions have been already answered. So I would like just to expand on a few details. First one is again on potential U.S. duties. I mean, as far as 100% of your, let's say, U.S. sales, how much was done in China vis-a-vis Europe, if it is possible to know? And the second one is related to your advertising and promotion expenses. In the light of your previous comment of the important commitment to your proprietary brands, shall we anyway still pencil in around 30% for those level of expenses?

Yes. On tariff, as we said before, we have started to diversify our supply chain also out of China. We are currently for the U.S. market sourcing 70% of the goods from China, so 7-0, roughly 10% is Asia out of China, 10% is Italy and 10% is U.S. as we also are producing our goggle for the Smith brand in U.S.

In terms of advertising, I think there is an important thing. It's due to the fact that our 60%, 65% of our investment in advertising is digital. We are very flexible. This gives us a big advantage on how we prioritize and we phase the investment. So currently, let me say, you can assume same level of investment of last year because, as I said, it's already quite a high level of investment also if you compare with some of our competitors. But obviously, this amount of investment will be prioritized behind our 4 brands and then on 2 of the license, but we will be very flexible, we will be very tight according to what we're going to read on the market. So we will like to do it in a very, very tight and flexible way as we did last year, but you can assume a comparable level of investment on advertising for the year.

The next question is from Domenico Ghilotti of Equita.

I have just one question on the buyback program. So how do you want to execute the buyback? And what is the time frame in which you want to execute the buyback?

So the buyback will be executed through Safilo SPA. Timing-wise, the AGM will approve the buyback in April, the AGM of SPA. And then, I mean, right after, we should be able to execute the buyback.

And the rationale is the optimization in the capital allocation. So can you just elaborate on why you decided now to launch a buyback?

I mean we believe that considering our strong results and our strong free cash flow generation, this is the best tool also in terms of flexibility given the overall context, as you said, to manage effectively our capital structure.

Gentlemen, Ms. Ferrante, there are no more questions registered at this time.

Okay. So thanks very much for participating with us and enjoy the remaining evening. Thanks very much.

Thank you.

Bye-bye. Thanks.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.