Press Release:
MILAN, April 28, 2011 /PRNewswire/ — The Board of Directors of Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX), a leader in the design,
manufacture and distribution of fashion, luxury and sports eyewear, met today and approved the consolidated results for the first quarter ended March 31, 2011, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IAS/IFRS).
First quarter of 2011(1)
Net sales
1,556.1
+11.8% (+9.2% at constant exchange rates(2))
Wholesale Division
641.1
+15.8% (+13.4% at constant exchange rates (2))
Retail Division
915.0
+9.2% (+6.4% at constant exchange rates (2))
Operating income
207.4
+21.1%
Net income attributable to Luxottica Group stockholders
114.7
+20.6%
Earnings per share
0.25
+20.2%
in US$
0.34
+18.9%
Operating performance for the first quarter of 2011
The results of the first quarter of 2011 have confirmed the encouraging indications seen during the first two months of the year and, more generally, the positive growth trends of both Luxottica Divisions in the geographic areas where the Group operates.
The growth drivers identified by Luxottica for 2011 – further development in emerging markets, the global expansion of Sunglass Hut, growth in the United States and the potential of Oakley – posted extremely positive performances, proving to be particularly effective.
Net sales of the Wholesale Division in emerging markets grew by approximately 28%, with excellent results in India, in the Middle East and in Brazil. Furthermore, and for the fifth consecutive quarter, the results recorded in North America, a key market for Luxottica, were very positive: Group first quarter net sales in U.S. dollars grew by more than 10%, mainly thanks to the excellent performance of the Wholesale Division (+28.1%) and of LensCrafters and Sunglass Hut, whose comparable store sales(3) rose by 7.1% and 10.5%, respectively.
All brands in the Luxottica portfolio posted positive results: in particular, some premium and luxury brands like Burberry, Prada, Ralph Lauren and Tiffany recorded extraordinary performances. Oakley has, in turn, re-confirmed its status as a truly excellent brand, with sales up by 11% during the quarter.
“During the first quarter of 2011, Luxottica recorded strong growth with, perhaps more importantly, a good balance between our Divisions, between the “optical” and “sun” businesses and across all the geographies where the Group operates,” commented Andrea Guerra, Chief Executive Officer of Luxottica.
“We were able to continue along the solid, stable growth path in North America, where net sales in U.S. dollars grew by more than 10% in the first quarter of 2011, after having posted a 7.9% increase in full year 2010 when compared to 2009. This means that Luxottica is achieving strong results in a market that is proving to be healthy.
“Our roots in emerging markets grow deeper daily and we are increasingly managing these key markets with the same confidence we enjoy in our more established markets.
“Our brand portfolio is in very good shape: premium and luxury brands posted very positive results, with some brands really outperforming expectations, and both Ray-Ban and Oakley continued to grow at double-digit rates.
“The results obtained in the first quarter are an excellent starting point for 2011: we look to the year optimistically, relying on the one hand on the strength of our brands, and aware on the other hand of the need to continue to impeccably execute our plans.”
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Consolidated results
Net sales for the first quarter of 2011 were Euro 1,556.1 million, up 11.8% over the same period of 2010 (+9.2% at constant exchange rates(2)).
Operating performance for the first quarter confirmed the increasing profitability trend, with a more than proportional growth as compared with net sales. More specifically, EBITDA(4) for the first quarter of 2011 rose by 16.6% over the same period of 2010, reaching Euro 283.0 million. EBITDA margin(4) was therefore up from the 17.4% recorded for the first quarter of 2010 to 18.2% for the first quarter of 2011.
Operating income for the first quarter of 2011 amounted to Euro 207.4 million, growing by 21.1% as compared with the same period of 2010, which also included an extraordinary gain in Australia. The Group operating margin therefore grew to 13.3% from 12.3% posted for the first quarter of 2010 (+150bps net of the above mentioned gain(5)).
Net income for the period increased to Euro 114.7 million, +20.6% over the Euro 95.1 million recorded for the first quarter of 2010, corresponding to an Earnings Per Share (EPS) of Euro 0.25.
Thanks to exchange rates, net debt(4) as of March 31, 2011 further decreased to Euro 2,071 million (Euro 2,111 million at December 31, 2010), and the ratio of net debt to EBITDA(4) was 1.9x, as compared with 2.0x at end of 2010.
Overview of performance at the Wholesale Division
The continuous, across-the-market success of Oakley and Ray-Ban, together with the positive performance of the premium and luxury brands, the success of commercial policies and of the STARS program, made it possible for Luxottica to achieve very positive quarterly results, both in terms of net sales and, even more relevant, profitability.
The Division’s net sales rose to Euro 641.1 million from Euro 553.5 million in the first quarter of 2010 (+15.8% at current exchange rates and +13.4% at constant exchange rates(2)).
Operating income for the Wholesale Division amounted to Euro 147.8 million, up by 23.1% compared with Euro 120.1 million for the first quarter of 2010. The operating margin rose to 23.1% from 21.7% for the first quarter of 2010 (+140 bps), confirming the effectiveness of the measures taken to recover margins.
In terms of sales performance in Luxottica’s main geographic markets, Luxottica saw positive results in all of its most important regions: all emerging markets, North America, Germany, France, Spain and Italy.
Overview of performance at the Retail Division
Net sales for the Retail Division rose to Euro 915.0 million from Euro 838.2 million in the first quarter of 2010 (+9.2% at current exchange rates, +6.4% at constant exchange rates(2)).
The Division’s operating income for the first quarter of 2011 increased to Euro 96.8 million, up 9.9% over the Euro 88.0 million recorded for the same period of 2010, which had also included an extraordinary gain in Australia. The operating margin therefore increased slightly from 10.5% in the first quarter of 2010 to 10.6%. Net of that gain(5), growth in operating income amounted to 19.3%, with an operating margin up by 90 bps.
In terms of comparable store sales(3), the optical business in North America made good progress (+5.4%), driven by results posted by LensCrafters (+7.1%), which confirmed the increases seen in recent quarters due to an improving mix. Positive comparable store sales(3) were also achieved by Pearle Vision, as a result of efforts to increase efficiencies at the brand, and by Target Optical.
Comparable store sales(3) of the optical business in the Asia-Pacific region in turn showed a slight but important increase (+0.4%), confirming the validity of the actions taken in the region. The trend of the Division in China was very positive, up both in terms of net sales and comparable store sales(3).
During the quarter, strong growth continued to be recorded by Sunglass Hut, which enjoys a worldwide leadership position as the global sun specialty chain: thanks to the success of the initiatives carried out over the period and its ability to continually attract new consumers and create meaningful relationships with them, comparable stores sales(3) of the chain worldwide have risen by 7.9%, showing extremely positive results in the United States (+10.5%).
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The Annual General Meeting of Stockholders took place today. Stockholders approved the Company’s IAS/IFRS consolidated financial statements for fiscal year ended December 31, 2010 and the distribution of a cash dividend of Euro 0.44 per ordinary share, reflecting a year-over-year 25.7% increase. The aggregate dividend amount is approximately Euro 200 million.
Based on the Borsa Italiana financial calendar, the cash dividend will be payable on May 26, 2011 (the ex dividend date will be May 23, 2011). Regarding the American Depositary Shares (ADS) listed on the New York Stock Exchange, the ex dividend date will be May 23, 2011 and, according to Deutsche Bank Trust Company Americas, the depositary bank for the ADSs, the payment date for the dividend in U.S. dollars will be June 2, 2011. The dividend amount in U.S. dollars will be determined based on the Euro/U.S. Dollar exchange rate as of May 26, 2011.
Because the mandate of Luxottica’s independent auditors, Deloitte & Touche S.p.A., expires upon issue of their report on the 2011 Financial Statements (and, by law, is not renewable), the Stockholders at the General Meeting also resolved to appoint PricewaterhouseCoopers S.p.A. as Luxottica’s new audit firm for its fiscal year beginning January 1, 2012, on the basis of the recommendation from the Board of Statutory Auditors.
The voting results of the stockholders meeting are set forth in the attached tables.
In accordance with article 144-bis, paragraph 4, of the Regulations for Issuers released by Consob under Resolution no. 11971/99, Luxottica Group S.p.A. announced today that the share buyback program approved at the Stockholders’ Meeting on October 29, 2009 expired today. The 2009 program provided for the buyback of a maximum of 18,500,000 ordinary shares in the Company for a period of 18 months.
Under the 2009 program, launched on November 16, 2009, Luxottica Group S.p.A. purchased an aggregate amount of 5,174,084 treasury shares, on the Milan Stock Exchange’s Mercato Telematico Azionario (MTA) at an average unit price of Euro 19.37, for an aggregate amount of Euro 100,225,536.
In parallel, Luxottica Group’s subsidiary Arnette Optic Illusions Inc. sold during the same period on the MTA an aggregate amount of 5,257,269 treasury shares, at an average unit price of Euro 19.23, for an aggregate amount of Euro 101,094,468.
Luxottica also announced that its Annual Report on Form 20-F for the fiscal year ended December 31, 2010 has been filed with the U.S. Securities and Exchange Commission (SEC). The report is available on Luxottica Group’s corporate website at www.luxottica.com, on the SEC website at www.sec.gov and on the Milan stock exchange Borsa Italiana website at www.borsaitaliana.it. Requests for hard copies of Luxottica Group’s audited consolidated financial statements (free of charge) may be made by contacting the Group’s investor relations department at the address investorrelations@luxottica.com.
Results fo
r the first quarter of 2011 will be discussed today in a conference call with the financial community starting at 6:30 PM CET. The audio portion and related presentation will be available to all via live webcast at www.luxottica.com.
The officer responsible for preparing the Company’s financial reports, Enrico Cavatorta, declares, pursuant to Article 154-bis, Section 4, of the Consolidated Law on Finance, that the accounting information contained in this press release is consistent with the data in the supporting documents, books of accounts and other accounting records.
