Press Release Source: Luxottica Group S.p.A. On Monday July 26, 2010, 11:42 am
MILAN, July 26 /PRNewswire-FirstCall/ — The Board of Directors of Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX), a global leader in the design, manufacture and distribution of fashion, luxury and sports eyewear, met today and approved the consolidated results for the second quarter and first half of the year ended June 30, 2010 in accordance with IAS/IFRS.
Second quarter of 2010(1) – IAS/IFRS
(In millions of Euro) Q2 2010 Q2 2009 Change
Net sales 1,595.1 1,401.6 +13.8% (+6.5% at constant exchange rates(2))
Operating income 258.3 203.3 +27.1%
Net income 150.1 115.3 +30.1%
Earnings per share 0.33 0.25 +29.6%
In US$ 0.42 0.34 +20.9%
First half of 2010(1) – IAS/IFRS
(In millions of Euro) H1 2010 H1 2009 Change
Net sales 2,986.8 2,714.0 +10.1% (+6.7% at constant exchange rates(2))
Operating income 429.6 357.5 +20.2%
Net income 245.1 194.1 +26.3%
Earnings per share 0.53 0.42 +25.9%
In US$ 0.71 0.57 +25.4%
Operating performance for the second quarter of 2010
For Luxottica, the second quarter reflected the strongest results in the Group’s history. For the first time ever, quarterly net sales approached euro 1.6 billion, with net income reaching euro 150 million. Both Divisions contributed to the achievement of this excellent result, successfully reaping the benefits of the extraordinary work carried out during recent quarters and confirming the strength of the Group’s brands while strengthening our market position.
Please see page 2 for comments from CEO Andrea Guerra,
plus consolidated and wholesale results
“We are particularly proud of the results achieved by Luxottica this quarter,” commented Andrea Guerra, Chief Executive Officer of Luxottica. “We have successfully invested in the right markets and embarked on actions that are resulting in very positive results indeed. We have launched collections and special projects that have proven to be particularly well-received in the market and we have been able to achieve growth wherever we identified opportunities.
“Our brand portfolio has once again proven to be our strength: Ray-Ban and Oakley continued to record double-digit percentage growth and our premium and luxury brands also had positive improvement. We should also mention the performance recorded in North America, a key region for Luxottica: despite the fact that the US consumer is still cautious, our sales in US dollars were up by 8%, rewarding the efforts made by our Wholesale Division, Sunglass Hut and LensCrafters, as well as the growing synergies we are developing between our Divisions.
“These results provide an excellent basis for us to look with confidence to the second half of the year. Once again, we are aware that it will be important to remain determined and seize opportunities from wherever they come.”
In the second quarter of the year, Luxottica achieved positive performances in most geographic regions where it is present. The Wholesale Division recorded its best sales performance in the Group’s history. Emerging markets made a key contribution to this performance, boasting an increase in Wholesale sales by approximately 30% compared to the same period last year, along with the United States and Europe, which enjoyed a particularly positive ‘sun’ season.
The results posted by Sunglass Hut were also very solid, with net sales benefiting from the major store-opening plan within US department store Macy’s, allowing record sales to be recorded in June. Strong results were also posted by the two recently-opened flagship stores.
Consolidated results
In the second quarter of 2010, net sales rose by 13.8% at current exchange rates and by +6.5% at constant exchange rates(2), to euro 1,595.1 million from euro 1,401.6 million. During the half-year period, net sales rose by 10.1% to euro 2,986.8 million (euro 2,714.0 million in the first half of 2009).
EBITDA(3) grew over the previous year by +22.2% to euro 335.4 million for the second quarter, from euro 274.5 million in the second quarter of 2009. For the first half of the year, EBITDA(3) grew to euro 578.0 million from the euro 501.5 million posted for the first half of 2009.
Operating income was euro 258.3 million for the second quarter (euro 203.3 million for the same period last year, +27.1%), while the Group’s operating margin improved from 14.5% in the second quarter of 2009 to 16.2% in the second quarter of 2010. In the first half of the year, operating income amounted to euro 429.6 million, up 20.2% from the euro 357.5 million posted for the same period last year.
Net income for the second quarter of 2010 increased to euro 150.1 million (up by 30.1% from euro 115.3 million for 2009), resulting in earnings per share (EPS) of euro 0.33 (at an average Euro/Dollar exchange rate of 1.2708).
For the second quarter of 2010, once again the Group generated excellent positive free cash flow(3) (euro 160 million): however, because of the exchange rate effect after having paid dividends during the quarter of more than euro 160 million and having acquired the remaining 35.16% of our Turkish subsidiary for approximately euro 60 million, consolidated net debt as of June 30, 2010 amounted to euro 2,646 million (euro 2,337 million at the end of 2009), with a ratio of net debt to EBITDA(3) of 2.8X, compared with 2.7X at the end of 2009 (net of the exchange rate effect, the ratio of net debt to EBITDA(3) as of June 30, 2010 would have been 2.6X, down from 2.8X as of December 31, 2009).
Overview of performance at the Wholesale Division
The excellent trend of all Group brands, with Ray-Ban and Oakley having stable double-digit growth, the positive performance of our luxury brands (also up by double digits), the continuous success of our commercial policies and the STARS program made it possible for the Wholesale Division to achieve positive quarterly results.
The Division’s sales rose to euro 651.2 million in the second quarter from euro 575.4 million in the second quarter of 2009 (+13.2% at current exchange rates and +7.8% at constant exchange rates(2)). For the half-year, net sales were euro 1,204.7 million, up 11.9% from the euro 1,077.0 million recorded for the first half of 2009 (+8.4% at constant exchange rates(2)). In terms of sales performance in the main geographic areas, Luxottica saw positive results in emerging markets, particularly in Brazil, China, India, Korea and Eastern Europe.
Operating income for the Wholesale Division in the second quarter amounted to euro 157.2 million, up by 21.5% compared with euro 129.3 million for the second quarter of 2009. The operating margin rose to 24.1%, from 22.5% for the second quarter of 2009, confirming the effectiveness of the measures taken to recover margins. In the first half of the year, the operating margin was 23.0% (compared to 21.8% in the first half of 2009).
Please see page 3 for retail results
Overview of performance at the Retail Division
Net sales for the Retail Division rose to euro 944.0 million in the second quarter from euro 826.2 million in the second quarter of 2009 (+14.3% at current exchange rates, +5.6% at constant exchange rates(2)). During the half-year period, net sales were euro 1,782.1 million, rising by 8.9% from euro 1,637.0 million for the first half of 2009 (+5.6 at constant exchange rates(2)).
In terms of comparable store sales(4), the “prescription” business in North America made good progress (+4.1%), with LensCrafters posting solid growth in comparable store sales despite less focus on promotions when compared to the same period last year and continuing to benefit from the measures initiated over the last few months. Positive comparable store sales were also achieved by Sears Optical and Target Optical.
In contrast, comparable sales trends in Australia were negative, in a market where the effects of the structural adjustment of the global economy are being felt in 2010. However, this has not caused Luxottica to slow investments in the area, as confirmed by the recent opening of the first OPSM eye hub, an innovative concept store that marks a new era in the retail field.
Sunglass Hut, the Group’s sun specialty chain that operates in a number of geographic areas, also posted positive results in terms of margins, with overall comparable store sales(4) up 4.6%, due mainly to positive results achieved in the United States (+5.5%) and the UK.
The Division’s operating income grew by +19.4% to euro 136.6 million in the second quarter from euro 114.4 million in the second quarter of 2009. The operating margin rose to 14.5% from 13.8%. On a half-yearly basis, the operating margin was 12.6% (compared to 12.0% in the first half of 2009).
The results for the second quarter and first half of 2010 will be discussed today at 6:30 PM CET (12:30 PM US ET), during a conference call with the financial community. The presentation will be available via webcast directly from the website www.luxottica.com.
In accordance with subsection 2 of Article 154-bis of the Italian Consolidated Finance Law, the Director appointed to prepare the company’s accounts, Enrico Cavatorta, hereby declares that the accounting disclosure contained in this release complies with the results of the accounting records, books and registers of the Group.
(1) All comparisons, including percentage changes, are between the three and six-month periods ended June 30, 2010 and June 30, 2009, as indicated, in accordance with IAS/IFRS.
(2) Figures given at constant exchange rates have been calculated using the average exchange rate of the respective comparative period in the previous year. For further information, please refer to the attached tables.
(3) EBITDA, free cash flow, net debt and the ratio of net debt to EBITDA are not measures in accordance with IAS/IFRS. For further information on such non-IAS/IFRS measures, please see the attached tables.
(4) Comparable store sales reflect the change in sales from one period to another that, for comparison purposes, includes in the calculation only stores open in the more recent period that also were open during the comparable prior period, and applies to both periods the average exchange rate for the prior period and the same geographic area.
Luxottica Group S.p.A.
Luxottica Group is a global leader in premium fashion, luxury and sports eyewear with more than 6,300 optical and sun retail stores in North America, Asia-Pacific, China, South Africa and Europe and a strong and well-balanced brand portfolio.
Luxottica’s key house brands include Ray-Ban, the best-known sun eyewear brand in the world, Oakley, Vogue, Persol, Oliver Peoples, Arnette and REVO, while license brands include Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Salvatore Ferragamo, Tiffany and Versace.
In addition to a global wholesale network covering 130 different countries, the Group manages leading retail brands such as LensCrafters, Pearle Vision and ILORI in North America, OPSM and Laubman & Pank in Asia-Pacific, LensCrafters in China and Sunglass Hut globally. The Group’s products are designed and manufactured at its six manufacturing plants in Italy, two wholly-owned plants in China and a sport sunglass production facility in the US. In 2009, Luxottica Group posted consolidated net sales of euro 5.1 billion.
Additional information about the Group is available at www.luxottica.com.
