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Luxottica Profits Rise 8 Percent

Despite the U.S. dollar’s decline against the euro, firm is “well on track” to reach its full-year objectives.

ROME — Luxottica Group SpA said Monday profits increased 8 percent in the second quarter, despite the U.S. dollar’s decline against the euro. Luxottica, whose largest single market by sales is the U.S., said despite currency pressures it’s “well on track” to reach its full-year objectives.

This story first appeared in the July 26, 2011 issue of WWD.  Subscribe Today.

Luxottica, which owns the Ray-Ban and Oakley brands, said net income rose to 162.1 million euros, or $233.2 million, in the three months ended June 30, compared with profits of 150.1 million euros, or $191.5 million, in the same period a year earlier. Earnings per share rose to 0.35 euros, or 50 cents, from 0.33 euros, or 42 cents.

Luxottica said sales rose 2.4 percent to 1.63 billion euros, or $2.35 billion, compared with the prior-year period, helped by a healthy sun season and performance of its luxury license brands, citing Burberry, Chanel, Persol, Polo Ralph Lauren, Prada and Tiffany as top performers.

Eliminating currency fluctuation, sales were up 9.5 percent. Dollar figures have been converted from the euro at average exchange for the periods to which they refer.

Profit margin of its retail business fell to 14 percent from 14.5 percent a year earlier and net sales of its retail division slid 1.5 percent. The operating margin of its wholesale division, however, rose to 26.8 percent for the second quarter of 2011 from 24.1 percent in the second quarter of 2010.

Geographically, the company experienced rising sales in all regions worldwide.

“Despite the weakening of the U.S. dollar exchange rate, our net sales in U.S. dollars in the fundamental region of North America were strong, growing by 7.5 percent during the quarter,” said Andrea Guerra, chief executive officer.

Luxottica also said performance was excellent in Europe, the Middle East, South East Asia and Latin America, where it will continue to open new stores and expand its presence.

In April, the company said it planned to take control of Multiopticas Internacional in order to fuel its expansion plans in into Latin America. Multiopticas owns more than 470 eyewear stores selling prescription and fashion sunglasses in Chile, Peru, Ecuador and Colombia.

Comparable store sales from the group’s sun specialty chain Sunglass Hut were up 7.8 percent in the second quarter, lifted by the U.S. market.

Looking ahead, the company said it is confident about reaching its full-year targets. In March of this year, Luxottica said if sales grow in high-single digits throughout 2011, then earnings before interest and taxes and net profit will grow twice as fast as sales, at constant exchange rates.

“We strongly believe that these results provide an excellent basis for us to look with confidence to the second half of the year,” Guerra added.

During a company conference call, Guerra said July has been a “good month” and portfolio orders remain solid.