Luxottica Continues on Growth Track in Q2

The company posted gains at both its wholesale and retail divisions globally.

MILAN — Luxottica reported continued growth in profitability and revenues in the second quarter, posting gains at both its wholesale and retail divisions globally through its own brands and through the sale of its licensed top designer labels.

In the three months ended June 30, net profit rose 9.4 percent to 212 million euros, or $275.6 million, compared with 193.7 million euros, or $248 million, in the same period last year. Adjusted net profit climbed 12.5 percent to 218 million euros, or $283.4 million, compared with 194 million euros, or $248.3 million.

(The adjusted data for the first half and second quarter of 2013 does not include nonrecurring costs relating to the reorganization of Alain Mikli International amounting to an adjustment of approximately 9 million euros, or $11.7 million, to operating income, or about 6 million euros, or $7.8 million, on an after-tax basis.)

Sales gained 7.2 percent to 2.02 billion euros, or $2.63 billion, compared with 1.88 billion euros, or $2.41 billion, in the same period last year.

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Dollar amounts have been converted at average exchange rates for the periods to which they refer.

“We are proud to announce a record second quarter, and we once again achieved excellent results,” said chief executive officer Andrea Guerra, touting growth in all geographic markets and all divisions.

Europe performed very well in the quarter, he said. “Mediterranean markets returned to providing a positive performance and yielding excellent growth” as revenues gained 11 percent. Continental Europe grew 13.7 percent, and emerging markets climbed 19.3 percent. “Brazil, China, India and Southeast Asia reported the strongest results during the quarter, confirming solid and consistent progress,” noted Guerra.

North America showed a 5 percent increase in sales, reporting an 8.2 percent gain in the wholesale division.

Globally, Luxottica’s retail division was up 4 percent to 1.14 billion euros, or $1.48 billion, while the wholesale division grew 11.6 percent to 880 million euros, or $1.14 billion.

As profitability increased, adjusted operating margin reached 18.4 percent, the highest ever in Luxottica’s history.

“During the quarter, our brands continued their upward trend of strong and healthy development. In particular, Ray-Ban and Oakley yielded excellent performance, confirming their positive dynamic trend and organic growth as well as the effectiveness of new marketing initiatives in the period.”

The giant Italian eyewear-maker owns brands including Ray-Ban, Oakley and Persol, and produces under license for top names including the Giorgio Armani Group, Bulgari, Burberry, Chanel, Coach, Prada and Versace.

“The premium and luxury segment of our portfolio performed robustly and sales of the Armani collections fully met our expectations for the period,” said Guerra.

The company’s retail division saw solid sales around the world and Sunglass Hut “once more yielded excellent results,” with an 8.9 percent increase in sales.

In particular, Guerra noted the company was pleased that the July 4 opening of the new Sunglass Hut flagship in New York’s Times Square “immediately set a store sales record over a one-day period and aims to be the first store with eight-digit sales.”

The executive concluded saying, “These excellent results confirm that we enjoy a strong and robust business profile in a market with excellent growth prospects and we are confident that we have a solid foundation to reach our goals for 2013.”

Operating income grew 9.7 percent to 362 million euros, or $470.6 million, and adjusted operating income totaled 371 million euros, or $482.3 million, up 12.4 percent.

In the second quarter, strict control of working capital enabled Luxottica to generate positive free cash flow of 200 million euros, or $260 million, compared with 180 million euros, or $230.4 million, last year.

After paying dividends of 274 million euros, or $356.2 million, during the quarter, net debt at the end of June stood at 1.88 billion euros, or $2.44 billion, compared with 1.66 billion euros, or $2.12 billion, at the end of 2012.