MILAN — Softness in its Sunglass Hut International operation took the rap for lower second-quarter sales at Luxottica Group SpA, but operating efficiencies elevated earnings 8.1 percent.
This story first appeared in the July 29, 2002 issue of WWD. Subscribe Today.
The firm said its second-quarter net income rose to $111.8 million, or 25 cents a share, from $103.4 million, or 23 cents, in the 2001 quarter, as better operating margins offset weaker retail sales, especially at its recently acquired U.S. chain Sunglass Hut International.
Consolidated sales for the three months ended June 30 fell 4.3 percent to $871.2 million from $910.7 million in the prior-year quarter, but Luxottica said revenue would have been flat if currency rates had been constant. Retail sales dropped 1.5 percent to $539.7 million from $548.1 million in the second quarter of 2001 as same-store sales dropped 2.7 percent. Dollar figures have been converted from the euro at current exchange rates.
“This drop is entirely attributable to Sunglass Hut International, which saw its revenue diminish because of a general drop in consumption and the reduced traffic in shopping malls,” the company said in a statement.
For the six-month period ending June 30, net profit rose 13.8 percent to $213.4 million, or 47 cents, from $187.5 million, or 41 cents, while sales rose 6.2 percent to $1.7 billion from $1.6 billion.
“Barring a worsening of the political and economic scenario,” Luxottica expects to meet its profit targets for the year, chairman Leonardo Del Vecchio said in a statement. Assuming euro-dollar parity until the end of the year, De Vecchio said revenue will come in at about $3.2 billion compared with $3.07 billion in 2001, while net profit should come in at 12 percent of sales. That comes out to $385.8 million compared with $317.9 million last year.
Citing uncertain economic times and dwindling consumer confidence amid a host of corporate scandals and a slouching stock market, Del Vecchio said he is “convinced that solid companies will come out even stronger from this negative environment.”