Luxottica posts 5.2 percent sales growth in Q1

Luxottica's first quarter revenues were up 5.2 percent to 2,384 million euros (2,596 million dollars), which the company said was a result of the group’s strong performance in Europe and Latin America, a favorable foreign exchange rate environment and the positive performance of the Ray-Ban’s latest collections and new Ray-Ban stores in China and United States.

"We close the first quarter of the year with results we consider to be particularly positive as the distribution approach focused on quality sales growth has led to an increase in revenues and an improvement in margins," commented Leonardo Del Vecchio, Executive Chairman and Massimo Vian, CEO for Product and Operations of Luxottica in a statement, adding, "The excellent reception of our new spring-summer eyewear collections, including new brands in our portfolio such as Valentino and Ferrari, and an encouraging opening of the sun season, are pairing with the positive start of the second quarter, allowing us to confirm our outlook for the full year.”

Review of the first quarter trading

The company said, both the wholesale and retail divisions contributed to quarterly positive results. The wholesale business grew by 2.5 percent and remained unchanged at constant exchange rates, despite the stricter commercial policies Luxottica implemented in North America and China. The retail business recorded a 7.1 percent or 3.3 percent rise at constant exchange rates to 1,426 million euros (1,553 million dollars) due to the growth of new stores, the positive performance of optical retail in China and Australia, along with Sunglass Hut in Europe and Latin America, and the consolidation of Salmoiraghi & Viganò’s net sales into the group's results.

However, Luxottica said, comparable store sales, negative in the period, were the result of a series of commercial decisions aimed at enhancing brand equity and sharply reducing discounts and promotional periods across the group’s retail network. While this had a negative impact on first quarter net sales, the company said, it was less significant than initially projected and is set to positively affect the group’s income statement results. The growth of the group’s e-commerce platforms, equal to 6 percent, was affected by the drop in promotional activities at Oakley.com and SunglassHut.com.

Q1 results across geographies

In North America, the group’s sales rose 1.1 percent but declined 2.5 percent at constant exchange rates to 1,370 million euros (1,491 million dollars). The wholesale division rose 0.5 percent at current exchange but declined 3.2 percent at constant exchange rates. The company said, efforts to improve execution at LensCrafters and the curtailing of promotional activities affected sales, in particular at Sunglass Hut and Oakley, and impacted overall retail results in the quarter, which were up 1.3 percent at current exchange but down 2.3 percent at constant exchange rates.

In the first three months of the year, sales in Europe increased 15.5 percent or 17.4 percent at constant exchange rates to 517 million euros (563 million dollars), driven by Italy, Germany, Portugal and Eastern Europe, as well as other countries. Net sales from Turkey also positively contributed to results. The Retail division in Europe expanded in the quarter owing to the consolidation of net sales from approximately 430 Salmoiraghi & Viganò stores in Italy and sales growth in Sunglass Hut in Continental Europe.

In Asia-Pacific, the first quarter sales rose 6 percent or 0.6 percent at constant exchange rates to 307 million euros (334 million dollars) due to positive trading in Australia, India and Japan. In Mainland China, the deep restructuring of its distribution platform impacted wholesale division results, while retail grew due to the very strong performance of the optical business driven by the success of over 50 Ray-Ban stores. In Australia, positive results were driven primarily by OPSM's positive performance.

Latin America’s sales increased by 17.6 percent or 5.5 percent at constant exchange rates to 145 million euros (157 million dollars). Mexico continued to be among the fastest growing countries for the group while Brazil also performed well. In the retail segment, GMO sales continued to grow and Sunglass Hut comparable store sales increased double-digits in Mexico and the Andean region.

The stockholders at the general meeting also approved the distribution of a cash dividend amounting to 0.92 euros (1 dollar) per share, equal to 50 percent of the adjusted net income of the group. The company said, total dividend amount will be approximately 440 million euros (479 million dollars).

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