MILAN — Italian eyewear giant Luxottica Group SpA cut its earnings-per-share forecast by more than 13.5 percent Tuesday after net profits fell for the third straight quarter.
This story first appeared in the October 29, 2008 issue of WWD. Subscribe Today.
Luxottica, which has licenses with Chanel, Dolce & Gabbana, Prada and Versace, among others, revised down 2008 EPS to between 0.96 euros, or $1.20 at current exchange, and 0.98 euros, or $1.23, from a previous guidance of between 1.11 euros, or $1.39, to 1.14 euros, or $1.43.
Net profits for the three months through Sept. 30 fell 7 percent to 104.6 million euros, or $157.6 million at average exchange, which the company attributed to unfavorable exchange rates and higher financial charges after last November’s acquisition of the Oakley brand.
Revenues for the period gained 5.3 percent to 1.21 billion, or $1.82 billion, boosted by sales of Oakley frames, “good results” at wholesale in continental Europe and “marked growth” in Brazil, India and Southeast Asia, the company said. That helped offset the slowdown in consumer spending in North America, which accounts for more than two-thirds of Luxottica’s turnover. At constant exchange, revenues were up 12.8 percent.
“We are in a particularly difficult year,” Luxottica Group chief executive officer Andrea Guerra said. “However, I am satisfied with how Luxottica reacted…[and] I am convinced that Luxottica’s increasingly solid foundation puts us in the best possible position to handle a situation as demanding as the one that is presented to us.”
Pro forma net sales, which include Oakley as if it had been acquired at the start of last year, dropped 2.7 percent at constant exchange, hurt by a dip in demand for designer frames and a slowdown in “certain” Mediterranean countries of Europe and in Japan, the company said.
As of Sept. 30., net debt stood at 2.91 billion euros, or $3.64 billion at current exchange, from 2.84 billion euros, or $3.56 billion, at the end of June.
None of the group’s credit facilities require refinancing in the coming months, and maturities until 2011 may largely be covered by the group’s cash generation, the company said.
Luxottica said pro forma operating margins should improve in the fourth quarter when compared with the same period last year and that it expected cash flows for the full year to reach 360 million euros, or $450.6 million, to 380 million euros, or $475.7 million.