BUSINESS: Financial Luxottica Reports Rise in Wholesale and Retail Sales for Q1 By Staff Monday, May 1, 2017 12:23 AM MILAN—Luxottica Group (NYSE:LUX) reported its financials for the first fiscal quarter, ending March 31, 2017, reflecting net sales rose 1.9 percent at constant exchange rate to reach €2,38 billion for the three month, period a gain of 5.2 percent at current exchange rates. For the Q1, Luxottica’s wholesale division’s net sales rose 2.5 percent to €958 million, or flat with the first quarter of 2016 at constant exchange rates. The Group’s retail division’s net sales rose 3.3 percent at constant exchange rates, or 7.1 percent to €1.43 billion.The wholesale business’s growth was positive, the company said, despite the stricter commercial policies (MAP policies) which Luxottica implemented in North America and China. The retail business grew due to new stores, the positive performance of optical retail in China and Australia, along with Sunglass Hut in Europe and Latin America, as well as the consolidation of Salmoiraghi & Vigano’s net sales into the Group's results. Comparable store sales, negative in the period, were the result of a series of commercial decisions aimed at enhancing brand equity and sharply reducing discounts and promotional periods across the Group’s retail network. While this had a negative impact on first quarter net sales, it was less significant than initially projected and is set to positively affect the Group’s income statement results, the company said in its announcement.The six percent growth of Group’s e-commerce platforms, was affected by the drop in promotional activities at Oakley.com and SunglassHut.com in the quarter. Ray-Ban.com continued to grow double-digits, confirming the strength of the brand and the consumer's willingness to buy through authorized channels, management noted.“We close the first quarter of the year with results we consider to be particularly positive as the distribution approach focused on quality sales growth has led to an increase in revenues in line with expectations and an improvement in margins," commented Leonardo Del Vecchio, executive chairman and Massimo Vian, CEO for product and operations of Luxottica. "Today Luxottica is a stronger and more competitive company, able to generate significant results and move fast on the market. In the past twelve months, we have introduced a number of business enhancements and our organization has radically changed and improved. The MAP policy in North America, the streamlining of promotional activities in the retail and online channels, the global fight against counterfeiting and grey market goods, and the change in our distribution strategy in China all weighed on the Group's short-term performance, but will support the business and our strategic vision in the medium- to long-term.” Senior executives also said, “The excellent reception of our new spring-summer eyewear collections, including new brands in our portfolio such as Valentino and Ferrari, and an encouraging opening of the sun season, are pairing with the positive start of the second quarter, allowing us to confirm our outlook for the full year.”In North America, which represents 57 percent of the Group’s total sales, overall N.A. sales dipped 2.5 percent at constant exchange rates, to €1.37 billion, which continue to be affected up by initiatives aimed at improving the quality of sales and distribution across all channels.Efforts to improve execution at LensCrafters and the curtailing of promotional activities affected sales, in particular at Sunglass Hut and Oakley, and impacted overall retail results in the quarter which were reported at €1.08 billion. The wholesale division reported results in line with the first three months of 2016 of €290 million (down 3.2 percent at constant exchange rates, or up 0.5 percent at current exchange rates), with a significant increase in business from independent opticians and key accounts and a decline in sales to online players due to the impact of the MAP policy. In the first three months of the year, Europe recorded excellent performance in all business areas, with sales increasing by 15.5 percent or 17.4 percent at constant exchange rates, notwithstanding strong first quarter results in 2016. The region's strong growth was driven by Italy, Germany, Portugal and Eastern Europe, but was also supported by contributions from other countries. Net sales from Turkey also positively contributed to results (excluding the effect of the strong devaluation of the Turkish Lira). The retail division in Europe expanded in the quarter thanks to the consolidation of net sales from approximately 430 Salmoiraghi & Vigano stores in Italy and sales growth in Sunglass Hut in Continental Europe. In Asia-Pacific, the first quarter of the year showed a sequential improvement in sales performance as compared to the fourth quarter of 2016 and was up 6 percent in current rates, or 0.6 percent at constant exchange rates from the first quarter of 2016 due primarily to Australia’s, India’s and Japan’s strong sales performance. In Mainland China, the deep restructuring of its distribution platform impacted wholesale division results, while retail grew due to the very strong performance of the optical business driven by the success of over 50 Ray-Ban stores. In Australia, positive results were driven primarily by OPSM's excellent performance stemming from new assortment policies introduced in 2016 along with the ability to attract consumers through the quality of in-store eye-exams, the company said. Latin America’s growth trend from the last two years continued and sales increased by 5.5 percent at constant exchange rates or 17.6 percent at current rates in the first quarter. Mexico continued to be among the fastest growing countries for the Group while Brazil's contribution was meaningful due in part to the revaluation of Real, despite the current unfavorable economic environment. In the retail segment, GMO sales continued to grow in the first quarter of the year and Sunglass Hut comparable store sales increased double-digits in Mexico and the Andean region.The stockholders of Luxottica Group S.p.A. met on April 28 at the General Meeting of Stockholders to approve the statutory financial statements for fiscal year 2016.Luxottica also announced the publication on the corporate website Luxottica.com of the new section “Sustainability—To see the beauty of life" that describes the Group’s sustainability vision founded on four pillars: “Commitment to excellence," "Visual well-being," "Social equity," and "Protecting environment."