MILAN — A strong euro weighed on fourth-quarter sales of Luxottica Group SpA and, in a full-year 2017 trading update, the Italian eyewear company said revenues last year were up only 0.8 percent to 9.15 billion euros. This compares with 9.08 billion euros in 2016. At constant exchange rates, sales in the 12 months ended Dec. 31 increased 2.2 percent.
Free cash flow is expected to reach record levels and adjusted net income is expected to grow strongly, said Luxottica on Monday after trading hours in Milan, where it is publicly listed. Adjusted net income excludes the impact of adjusting items including restructuring and reorganization costs and non-recurring income and expense items. Luxottica said the performance was boosted by the group’s more efficient platform and greater business integration.
“Regarding 2018, the group is looking forward with confidence to the growth of the next 12 months,” said executive chairman Leonardo Del Vecchio.
In the last quarter of 2017, revenues were down 2.3 percent to 2.09 billion euros, compared with 2.14 billion euros in the same period the previous year. At constant exchange rates, sales were up 4.3 percent.
The performance in the three months ended Dec. 31 was driven by the acceleration of sales in both the retail and wholesale divisions and the positive performance of the business in Europe, North America, Australia and Brazil. The fourth quarter was also the best of the year for the wholesale business, retail comparable store sales, the performance of Sunglass Hut, and online sales, Luxottica said.
In the fourth quarter, the wholesale division slipped 0.4 percent to 754 million euros. At constant exchanges, the channel was up 4.7 percent. It posted double-digit growth in North America and Brazil.
The retail channel decreased 3.3. percent to 1.34 billion euros, but was up 4.1 percent at constant exchange, led by the contribution of new stores.
LensCrafters continued its focus on transforming its business model and reported negative, but improving, sales compared to the third quarter of 2017.
During the fourth quarter of 2017, Ray-Ban continued to grow in every segment and region thanks to a strong global communications strategy and integrated and omnichannel brand management. Oakley also showed solid and growing sales, recording its best quarterly growth, Luxottica said.
The company ended the year with a surprise announcement, revealing in December that chief executive officer for product and operations Massimo Vian was exiting, three months before his term expired.
Executive responsibilities are consolidated in the hands of Del Vecchio and deputy chairman Francesco Milleri, who is taking on the ceo role. Chief financial officer Stefano Grassi has been appointed to Luxottica’s board. Del Vecchio said at the time that the group’s reorganization and process of simplification, started more than three years ago, has been “almost completed.”
Luxottica and French lensmaker Essilor revealed in January last year a proposed merger, expected to create an eyewear powerhouse, named EssilorLuxottica, with annual sales of 16 billion euros.