Luxottica Realizes Double Digit Sales Growth and Increased Earnings, Despite Sluggish Quarter for LensCrafters

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MILAN—Despite a weak 1.1 percent comp-store growth in LensCrafters (comparable store sales for stores open more than one year) for the second quarter ended June 30, 2012, Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX) reported an overall group-wide net sales increase of 15.2 percent, from €1,633.5 million to €1,882.2 million, when compared to the same period last year, with the company citing strong overall North American retail sales, an improving sun business, the strength of business in emerging markets and record wholesale sales increases.

During a conference call with financial analysts this afternoon, Luxottica Group’s CEO, Andrea Guerra, acknowledged “a lot of ups and downs” due to the world economy and described the “Himalayan mountain we had to climb in Q2 2012 to be successful compared to the company’s record Q2 performance in the prior year.” While the quarter remained effectively flat in Western Europe, as Guerra cited strengths in Northern Europe but flat performance in Italy and Spain, he added, “We have grown more than we expected in the U.S., and we are extremely happy to see our performance in Australia.” Referring to the remainder of 2012, he added, “We’re facing this new, nervous period with a solid strategy and a solid team.”

The Group’s overall net income for the second quarter rose 20.6 percent to €195.5 million, compared to the prior year.

Luxottica realized double digit growth of 12 percent in wholesale sales internationally, with North American wholesale sales leading well above expectations, registering a 25 percent increase for the three-month period and gains of 21 percent for the half. Net sales for the wholesale division reached €788.2 million in the second quarter of 2011. On a half-year basis, net sales from wholesale were €1,515.0 million, improving by 12.6 percent at current exchange rates.

During the course of the second quarter, the growth trend continued in the retail division, in particular for Sunglass Hut and Oakley in North America and GMO in Latin America. Net sales for the division equaled €1,094.0 million, up 17.7 percent overall. For the first six months of 2012, net sales were €2,155.4 million.

Overall retail comps grew at 5.1 percent, with Sunglass Hut worldwide registering a 10.6 percent comp increase worldwide and 11.7 percent in North America while and OPSM Australia’s comps were up 8.3 percent.

Globally for first half of 2012, the retail group grew by 6.1 percent, when compared with the same period last year. For that six-month period, North American Licensed Brands (Sears Optical and Target Optical) were up 5.5 percent, Optical Australia/New Zealand up 5.2 percent, Sunglass Hut worldwide up 10.2 percent, while Pearle Vision’s total system comp sales were down 0.7 percent and down 1.2 percent in the second quarter. The Luxottica presentation indicated that Pearle is currently in the midst of “moving its business proposition from corporate sales to a franchising model.”

While LensCrafters’ top line and comp performance was not as robust as other divisions, Luxottica executives maintained during the conference call that they remain bullish about the retail chain and about the North American market in general. Much of LensCrafters’ weakness was attributed to the typically slow season during April and May followed in June by the implementation of SAP and increased promotion for the group’s Accufit campaign. The Luxottica optical retail business grew in profitability by 23.6 percent during the second quarter of 2012, Guerra pointed out.

More detail on Luxottica’s financial announcement can be found here: Luxottica Q2 2012 Results.