MILAN — Ahead of the mandatory exchange offer that will finalize the merger with Essilor, Luxottica Group on Monday reported a 2.9 percent increase in revenues in the third quarter of the year and confirmed its outlook for 2018, with sales growth of 2 percent.
In the three months ended Sept. 30, the Italian eyewear group saw sales rise to 2.21 billion euros, compared with 2.15 billion euros in the same quarter last year. At constant exchange rates, sales grew 3.5 percent. The company attributed the increase to the strong performance of the retail division and e-commerce platforms as well as solid growth in Europe, North America and Asia-Pacific.
In the nine months ended Sept. 30, sales decreased 4.5 percent to 6.76 billion euros, compared with 7.08 billion euros, in the same period last year. At constant exchange, sales gained 1.3 percent.
“We’re very pleased with the growing results posted in key countries and across all channels in this quarter,” said Leonardo Del Vecchio, executive chairman of Luxottica. “We are keeping a good balance between growth and profitability as further proof of the fact that global strategies and quality of execution are delivering the results we expected.”
Del Vecchio especially thanked the more than 80,000 employees of Luxottica who, “in this complex journey toward the creation of EssilorLuxottica, have always shown me full confidence, maintaining their passion and the attachment to our group. The strategic renewal that the group undertook over the last three years strengthened the vertically integrated business model and favored organizational simplification, increasing decision-making speed and execution precision. The excellent results are a solid basis for carrying out the integration with Essilor.”
The entrepreneur said that “in light of the positive trend in the retail and e-commerce businesses and the return to growth of the wholesale division,” Luxottica confirmed the outlook for 2018 “with expected sales growth around 2 percent and solid profitability.”
In the third quarter, wholesale revenues dropped 1 percent to 732 million euros, but were up 0.9 percent at constant exchange rates led by a positive performance in North America and strong improvement in Europe. During the summer, Europe recovered after a delayed start of the sun season.
Retail sales accelerated compared to the first six months of the year with like-for-like sales up 2.8 percent and revenues up 4.9 percent to 1.48 billion euros.
Europe and North America drove Sunglass Hut sales up 8 percent at constant exchange rates and positive sales were also driven by LensCrafters in North America, OPSM in Australia and Ray-Ban stores all over the world.
In the third quarter, revenues from the group’s e-commerce platforms were up by 16 percent at constant exchange rates and Ray-Ban.com was confirmed as the main driver of the group’s online business, benefiting from the exclusive launch of special collections and the brand-new campaign for Ray-Ban Studios, which strengthens the link between the brand, music and Millennials. SunglassHut.com and Oakley.com contributed to the performance of the online business as well.
By geographic markets, sales in North America were up 5.2 percent to 1.3 billion euros, accounting for 59 percent of total sales, and lifted by both retail and wholesale divisions.
Sales in Europe rose 2.3 percent to 468 million euros, representing 21 percent of the total, driven by France, the United Kingdom, Turkey and Eastern Europe and double-digit growth in the retail business. The wholesale division showed recovery compared to the first part of the year, when commercial policies realignment and the delay of the sun season led to a temporary slowdown in sales in the region.
In the third quarter, the group’s sales in the Asia-Pacific region increased 2.5 percent to 280 million euros. At constant exchange, sales rose 5.3 percent. Every market in the region contributed to growth, with the exception of Taiwan, which was temporarily affected by the upcoming opening of a commercial subsidiary.
Performance in Australia confirmed the strength of OPSM and Sunglass Hut. At the same time Japan, Korea and Southeast Asia — all strategic markets for the group — recorded an acceleration of growth.
After years of solid growth, the group’s sales in Latin America dropped 12.3 percent to 130 million euros. At constant exchange rates, sales decreased 1.2 percent, due to the contraction of the wholesale business in Brazil, because of the political and macro challenging environment. On the other hand, Mexico and the retail chains in Brazil and the rest of the region continued to register positive performances.
As reported, on Oct. 1, Del Vecchio’s family holding Delfin was submitting its shares in the giant Italian eyewear group to Essilor, or 62.42 percent of total, at a ratio of one share in Luxottica for each 0.461 per Essilor share. Essilor is billed as the world leader in ophthalmic optics and a key player in visual health. The new holding began trading in Paris on Oct. 2.
The newly formed EssilorLuxottica is expected to launch a mandatory exchange offer for all the remaining shares at the same ratio between Oct. 29 and Nov. 27, with the view toward delisting Luxottica’s shares in Milan. However, the squeeze-out, if any, including the settlement, could be expected between Jan. 28 and March 4.
First revealed in January 2017 and promising to likely transform the sector’s global landscape and spark both further technological innovation and deals, the merger was expected in the last quarter of 2018, following the approval of all interested competition authorities. The first board meeting of EssilorLuxottica is scheduled for Nov. 29.
Luxottica produces eyewear under license for names including the Giorgio Armani Group, Bulgari, Burberry, Chanel, Coach, Prada and Versace and has a number of owned brands, such as Ray-Ban, Oakley and Persol. It and Essilor, the leading maker of lenses worldwide, have agreed to a 46 billion euro, or $48.7 billion, merger to form an eyewear powerhouse with annual sales of more than 15 billion euros.