PARIS — EssilorLuxottica is seeing business improving across activities and has opened all of its factories and most of its stores, the eyewear giant said Thursday in a statement following a closed-door annual shareholder meeting.
“We see the first signs of recovery in all the business areas,” EssilorLuxottica chairman Leonardo Del Vecchio and the group’s executive vice chairman Hubert Sagnières said in a statement.
Shareholders approved the appointment of Paul du Saillant as chief executive officer of Essilor International and a director of the group, replacing Laurent Vacherot who retired, according to documents posted on the company web site.
The COVID-19 crisis prompted management changes at the upper ranks of the eyewear group, which slimmed down the number of executives on its management board by a third to simplify decision-making.
Formed in 2018 from the 46-billion-euro merger of France-based Essilor and Italy’s Luxottica, EssilorLuxottica has suffered challenges along the way, with early stages of integration complicated by disputes between top managers of the French and Italian factions of the company.
The company had reported a strong start to the year, but ended up withdrawing guidance a few weeks later when store closures rolled across Europe and North America. Behind the initial optimism was the return to business in China, where production was fully operational with spare capacity in March. EssilorLuxottica adjusted production according to demand, implemented cost and cash control measures, and suspended lower priority investments.
Asked by shareholders about its treatment of suppliers, the company replied that it sought to maintain strong relations with them while “efficiently” managing payment terms. The group is considering new supply-chain financing tools that would allow suppliers to get payments immediately at a competitive cost, it added.
EssilorLuxottica has moved past governance issues, said Bernstein analysts in an e-mailed note to clients Thursday. They are looking beyond synergies which are “relatively straightforward,” in their view.
“Essilor Luxottica is second to none in operations and about to get better,” they said, pointing to retail as activity harboring long-term potential.
“Retail is where the long-term value creation proposition is made or broken,” Bernstein said. The analysts pointed to the company’s dependence on retail sales — for one-third of business — while retail performance at Luxottica has been traditionally sub-par. The Grand Vision acquisition, if it clears regulatory hurdles, would make the group more dependent on retail and eyewear retail is growing increasingly competitive around the world, adding pressure on the group’s key customer — independent opticians.
“Essilor Luxottica is right to zero in on retail as its top priority,” noted the analysts. They are eyeing the potential of improved products and services lifting the proportion of sales to store space as well as the centralized lens operations, reducing Lens Crafters average store footprint. If the Grand Vision deal goes through, they are also interested in how the group will increase profitability of store space for that business.