MILAN--Luxottica Group is working to
grow its key retail brands as well as its wholesale business in the
months ahead, as it wraps up the initial stages of integrating the
Cole National businesses acquired a year ago into its ongoing
operations, according to chief executive officer Andreas
Guerra.
In retail, “We’re
extremely pleased with what our American team has done in the last
12 months,” Guerra said, noting that at the same time as the
Cole integration progressed this year, Luxottica’s existing
LensCrafters and Sunglass Hut chains “had their best year in
the last five or six years.” And on the retail side in
general in the U.S., “we are confident we’re on the
right track,” Guerra said. “The reorganization process
is over; now we need to execute a fantastic growth
plan.”
One focus of that growth plan will
be the Pearle Vision chain, according to Guerra. At Pearle, the
average transaction is up, aided by an emphasis on premium lenses,
and the chain has implemented new promotional activities and
labor-saving initiatives. In addition, franchisee support for new
advertising, franchising standards and Luxottica products has been
good, according to the company.
“We are confident 2006 will be
the Pearle Vision year,” Guerra said.
Sunglass Hut, which had double-digit
sales growth in the third quarter, is also seen as an opportunity
for growth, according to Guerra.
Both Sunglass Hut and LensCrafters
are in the midst of an ongoing store remodeling program. As of the
end of the third quarter, 146 Sunglass Hut stores had been
remodeled this year, with another 44 slated for remodeling by
year-end and more in 2006. So far in 2005, 184 LensCrafters
locations have been remodeled; another 108 will get facelifts in
the fourth quarter, continuing on into next year.
Luxottica’s wholesale business
was also strong in the third quarter, Guerra said, with
above-average growth in North America and double-digit growth in
all European markets. Noted the Luxottica executive, in the third
quarter “the wholesale market was positive, but the market
was even more positive for us.”
He said the company’s Donna
Karan brand, launched early this year, was “right on
target,” while the new Dolce & Gabbana collection, for
which Luxottica began taking orders Oct. 1, got off to a record
strong start.
On the financial side, Luxottica had
strong increases in both sales and income in its third quarter and
first nine months ended Sept. 30.
The company’s consolidated
sales in the quarter rose 47.3 percent to 1,069.4 million Euros
($1,304.3 million U.S.). Retail sales in the period were 849
million Euros, up 55.2 percent; comparable-store sales rose 5.3
percent in the period. Luxottica’s third-quarter wholesale
sales were 283.7 million Euros, up 26 percent; sales to third
parties increased by 23 percent in the period.
Net income rose 16 percent in the
third quarter, to 89.3 million Euros ($108.9 million
U.S.).
In the first nine months of 2005,
Luxottica did 3,251.9 million Euros ($4,106 million U.S.) in
consolidated sales, up 41 percent. Retail sales rose 52.1 percent
to 2,448.6 million Euros in the nine-month period; comp-store sales
were up 5.7 percent. The company’s wholesale sales reached
978.9 million Euros, up 17 percent.
Net income in this year’s
first nine months totaled 256.7 million Euros ($324.15 million
U.S.), a 13 percent increase.
Said Guerra, “In the first
nine months of 2005, we reached the same level of sales posted in
2004 for the full year, which in itself means that the Cole
National acquisition has already helped us to achieve a significant
result.”
Within Luxottica Retail, Sunglass
Hut experienced double-digit comparable-store sales growth for the
second quarter in a row, according to Luxottica. Retail results
were also positive in Asia-Pacific, “especially in terms of
profitability.”
On the wholesale side, the company
said its Ray-Ban brand posted “particularly strong results
for the quarter.” Other best-selling brands were Bulgari,
Chanel, Prada and Versace.--Cathy Ciccolella