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Luxottica Sees Fourth-Quarter Profits Drop

Global slowdown and write-off cut into bottom line for Luxottica Group SpA.

Luxottica Group SpA reported Thursday that a sharp reduction in demand, compounded by a $20 million write-off, reduced fourth-quarter profits by 60 percent.

This story first appeared in the March 13, 2009 issue of WWD.  Subscribe Today.

The Milan-based eyewear giant said it intends to reduce its global store count, currently over 6,250, by 2 to 3 percent during 2009.

In the fourth quarter, net income fell to 38.8 million euros, or $51.2 million, from 96.6 million euros, or $140.4 million, a year earlier. Excluding a credit write-off on the sale of the Things Remembered chain in the more recent period, profits were off 44.2 percent to 54.1 million euros, or $71.3 million.

Sales in the three months ended Dec. 31 were up 4 percent to 1.24 billion euros, or $1.63 billion, from 1.19 billion euros, or $1.72 billion. Sales were flat at constant exchange rates and down 5.5 percent at constant exchange when results of Oakley Inc., acquired for about $2.1 billion in November 2007, are included as if it were acquired at the start of 2007.

The company noted the global slowdown had hurt margins for both wholesale and particularly retail operations in the quarter.

Luxottica calculated dollar figures at average exchange for the periods to which they refer.

“We have already implemented a series of measures that will enable us to rapidly and flexibly adapt to the new environment and that will both contribute to boosting sales and streamline our cost structure across all divisions and geographic regions,” said Andrea Guerra, chief executive officer of Luxottica.

For the full year, net income fell 22.9 percent to 379.7 million euros, or $558.5 million, while sales topped 5 billion euros for the first time, rising 4.7 percent to 5.2 billion euros, or $7.65 billion. Earnings landed at the low end of the company’s forecast, revised in October, of EPS, excluding special items, of between 0.96 and 0.98 euros.