Cébé, the French sports eyewear brand that Marcolin acquired in 1999, is up for sale. Negotiations are currently underway with a potential purchaser who has offered to buy the brand, but its name cannot be revealed at this stage. If a satisfactory deal is not concluded, the Italian group will try to re-launch the brand, which still enjoys a certain notoriety, after implementing a drastic restructuring program entailing the closure of the factory that produces Cébé's ski goggles at Frasne, near Morez, and the adjacent logistics center. A total of about 100 workers are currently employed on the French site, whose operations would be transferred to Italy.

In view of the sale of Cébé, Marcolin has already written off €5,695,000 from its 2006 accounts. This charge includes debt of €1.5 million attributable to Cébé as of Dec. 31 2006, plus the difference between the value of the French subsidiary as featured on the group's balance sheet and the price at which it should be sold.

Cébé had an operating loss of €4,084,000 before depreciation and amortization (EBITDA), compared with a loss of €2,450,000 in 2005, and those extraordinary charges weighted further on its final results, leading the French subsidiary to post a loss of €10.8 million for 2006. Cébé's sales declined by 1 percent to €20 million. Cirillo Marcolin, chief executive of the group, told an Italian newspaper that the sports business unit did not achieve the expected targets and its sales of winter products have been further hit by the recent mild weather and the absence of snow in the ski resorts. Certain other factors that affected Cébé's results last year will not be repeated in 2007, according to the group's general manager, Antonio Bortuzzo.

Without the writeoff related to Cébé, Marcolin would have been able to report a net profit for last year. Instead it reported a consolidated net loss of €13,284,000, better still than the loss of €16,690,000 recorded in 2005. The group had in fact a positive operating profit of €4,894,000 million before depreciation and amortization (EBITDA), turning around from the EBITDA loss of €2,619,000 of the previous year. The loss at Cébé was offset by a profit of €9,147,000 for the group's fashion lines, which compares with a loss of €169,000 in 2005.

Operating results before interest and tax continued to show a negative value of €6.7 million, down from a loss of €12.6 million in 2005. Margins improved in the USA. The company's net financial position remained negative, but thanks to an equity increase it improved to a negative level of €32.1 million from €46.2 million.

Total consolidated sales rose by 2.3 percent to €157.4 million. In fact, Marcolin succeeded in replacing the revenues lost when Dolce & Gabbana went over to Luxottica by those of the new licenses it has more recently acquired. On a comparable basis, excluding the group's new licenses and the D&G lines, growth would have reached 25.5 percent. Excluding D&G, sales grew by 77.7 percent thanks to the new licenses, including Tom Ford, Just Cavalli, Ferrari and Web.

Geographically, the USA performed best with sales up by 11.4 percent. Italy came second with a 3.1 percent rise followed by the rest of the world, up by 1.4 percent. In the rest of Europe, increases of 23.4 percent in Portugal and 8.9 percent in France were insufficient to compensate for double-digit losses in other European markets, notably Germany and the UK, where the D&G brands had a higher impact.

The disposal of Cébé will enable Marcolin to focus on high-value products. In the first months of 2007 the group confirmed the positive trend of its top-end brands in the fashion and luxury sectors ? notably Cavalli, Tom Ford and Montblanc ? as well as in the casual and trendy segment. This should help the group return to profit, possibly as of this year.

Efforts will be focused on leveraging these existing brands, but also on signing new deals with brands of international reputation, particularly Italian luxury brands that are representative of the values of ?Made in Italy? quality. The launch of a line named after Tod's, the well-known Italian brand of footwear, is likely to take place in the Spring of 2008. Andrea and Diego Della Valle, who control Tod's, recently acquired a 40 percent stake in Marcolin.