Press Release:
MILAN, Oct. 24, 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 three- and nine- month periods ended September 30, 2011 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IAS/IFRS).
Operating performance for the third quarter of 2011
During the third quarter of 2011, Luxottica’s growth trend continued. In a macroeconomic environment that was, as a whole, positive, the Group benefitted from a very positive and prolonged “sun” season, delivering sales and earnings growth for the eighth straight quarter. The Group achieved particularly solid performance in Emerging Markets (growing more than 35% at constant exchange rates(2)) and in North America during this period. Despite the significant depreciation of the U.S. dollar against the Euro, going from 1.29104 during the third quarter of 2010 to 1.4127 (-8.6%) during the same period in 2011, net sales for the third quarter of 2011 exceeded Euro 1.5 billion and net income exceeded Euro 110 million. Additionally, during the period, Luxottica’s 50th anniversary celebrations took place.
“The results achieved in the third quarter of 2011 again testify to the strong commitment, determination and passion of our entire organization in serving our customers and consumers in our key summer sales season,” commented Andrea Guerra, Chief Executive Officer of Luxottica. “Both our Wholesale and Retail Divisions showed great energy and enthusiasm: we are more and more successful in establishing true and trusted relationships with our customers, in seizing the opportunities that new technologies provide and in marketing our brands in the most effective ways.
“Growth was solid across the board, from North America – where our net sales in U.S. dollars were strong growing by 7.8% during the quarter – to India, from China to Brazil, from Italy to South East Asia and Latin America, where the retail chain GMO joined our organization.
“Ray-Ban and Oakley continued to record very positive results; among the premium and luxury brands, Burberry, Tiffany and Ralph Lauren’s positive performance should also be mentioned. In our Retail Division, Sunglass Hut continued to grow strongly, with net sales increasing by more than 15% during the quarter, while OPSM in Australia is back on a solid growth trajectory.
“Today, there are increased uncertainties generally in international markets, but we believe there are still significant opportunities for growth: in the next few years, the target market for our products could increase by more than 2 billion new consumers. We strongly believe that our profile and results provide an excellent basis for us to look with confidence to the future and to the last quarter of the year.”
During the third quarter of the year, Luxottica achieved well-balanced growth in both its Retail and Wholesale Divisions. The results recorded by the Wholesale Division were once again excellent, with strong growth in net sales exceeding Euro 550 million (+10.7% at constant exchange rates(2)). Emerging markets, especially China, Brazil and the Middle East, made a key contribution to our quarterly results, along with Italy, Germany and the UK.
Sunglass Hut also turned in a strong performance for the fifth consecutive quarter, benefitting from an especially positive and prolonged “sun” season and its ability to attract and create meaningful relationships with new consumers. LensCrafters was able to improve on last year’s third quarter results, which were the best over the last four years. The Australian and Chinese retail businesses also performed very well in the third quarter.
Consolidated results
In the third quarter of 2011, net sales rose by 10.0% at constant exchange rates(2) (+4.0% at current exchange rates) to Euro 1,523.8 million from Euro 1,464.7 million in the third quarter of 2010. During the nine-month period, net sales rose by 9.6% at constant exchange rates(2) to Euro 4,713.5 million, from Euro 4,451.5 million in the first nine months of 2010.
Adjusted EBITDA(3,4) for the third quarter of 2011 grew over the previous year by 4.7% to Euro 276.0 million, from Euro 263.5 million in the third quarter of 2010. For the first nine months of the year, adjusted EBITDA(3,4) increased to Euro 911.1 million from Euro 841.5 million posted for the same period of 2010.
Adjusted operating income(3,4) for the third quarter of 2011 was Euro 197.4 million (Euro 186.4 million for the same period last year, +5.9%), while the Group’s adjusted operating margin(3,4) improved from 12.7% in the third quarter of 2010 to 13.0% in the third quarter of 2011. For the first nine months of the year, the adjusted operating income(3,4) amounted to Euro 681.6 million, up 10.6% over the Euro 616.0 million posted for the same period last year.
Adjusted net income(3,4) for the third quarter of 2011 increased to Euro 106.1 million, up by +4.1% from Euro 101.9 million in the same period of 2010, resulting in adjusted earnings per share(3,4) (EPS) of Euro 0.23 (at an average Euro/U.S. dollar exchange rate of 1.4127). The adjusted EPS(3,4) in U.S. dollars grew by 13.4% from U.S. $0.29 in the third quarter of 2010 to U.S. $0.33 in the third quarter of 2011.
For the third quarter of 2011, Luxottica once again generated positive free cash flow(4) (Euro 200 million). Net debt(4) as of September 30, 2011 amounted to Euro 2,078 million (Euro 2,111 million at the end of 2010), with a ratio of net debt to adjusted EBITDA(3,4) of 1.8x as compared with 2.0x at the end of 2010.
Overview of performance at the Wholesale Division
During the third quarter of 2011, the Wholesale Division continued to record excellent results, both in terms of net sales and of profitability, increasing its presence in fast-growing regions and exploiting opportunities across the board. Underlying this performance is the excellent feedback received on our new collections, the ability of the organization to build and maintain strong relationships with customers, the success in promoting Luxottica’s brands by highlighting their core values and providing excellent customer service.
During the quarter, Ray-Ban and Oakley’s performance were once again exceptional and strong sales of premium and luxury brands such as Burberry, Tiffany and Ralph Lauren were also recorded. The STARS program and the Travel retail business were also very successful this quarter.
The Wholesale Division’s net sales rose to Euro 555.1 million in the third quarter of 2011, from Euro 518.3 million in the third quarter of 2010 (+10.7% at constant exchange rates(2) and +7.1% at current exchange rates). In the first nine months of 2011, net sales were Euro 1,900.2 million, up 11.9% at constant exchange rates(2) from the Euro 1,722.9 million recorded for the first nine months of 2010 (+10.3% at current exchange rates).
Operating income for the Wholesale Division amounted to Euro 104.9 million in the third quarter of 2011, up 10.5% compared with the 94.9 million recorded for the third quarter of 2010. The operating margin rose from 18.3% in the third quarter of 2010 to 18.9% for the third quarter of 2011. In the first nine months of 2011, the operating margin was 23.2% (21.6% in the same period of 2010).
Overview of performance at the Retail Division
During the third quarter of 2011, the Retail Division continued to grow, with well balanced performance in all the regions where the Group operates: at constant exchange rates(2), net sales for the Retail Division grew by 9.6%. The depreciation of the U.S. dollar against the Euro did, however, affect the translation of net sales, since approximately 80% derive from sales in North America. Net sales at current exchange rates were Euro 968.7 million for the third quarter of 2011 (Euro 946.5 million in the third quarter 2010, +2.4%). During the first nine months of 2011, net sales were Euro 2,813.3 million, up 8.0% at constant exchange rates(2) from Euro 2,728.6 million recorded for the first nine months of 2010 (+3.1% at current exchange rates).
In terms of comparable store sales(5), the Retail Division overall grew by 4.3%. In particular, sales in the optical business in North America increased +0.4%, with LensCrafters recording a 1.4% increase in comparable store sales(5).
As a result of initiatives launched in recent months, comparable store sales(5) in the optical business in Australia were back on a track with solid growth of 7.0% in the third quarter of 2011 over the same period last year. The optical business in China also posted very good results, with comparable store sales(5) growing by 20.9% over the same period last year.
Once again, Sunglass Hut, the Group’s sun specialty chain that operates in a number of countries, posted exceptional results with overall comparable store sales(5) up 8.3% in the third quarter of 2011 and a particularly positive performance in the United States (+10.1%).
Due to the exchange rate effect, adjusted operating income(3,4) of the Division went from Euro 129.3 million in the third quarter of 2010 to Euro 127.4 million in the third quarter of 2011 (-1.5%). During the period, in order to further increase our commitment and service excellence provided to customers, along with allocating more resources to consumer-facing roles, LensCrafters and Pearle Vision restructured their field and store management operations in the U.S. and Canada. The adjusted operating margin(3,4) declined to 13.2% in third quarter of 2011 from 13.7% in third quarter of 2010. On a nine-month basis, the adjusted operating margin(3,4) was 12.6% (13.0% in the same period of 2010).
The Board of Directors also approved the partial demerger of Luxottica S.r.l., a wholly-owned subsidiary of Luxottica Group S.p.A., in favor of Luxottica Group S.p.A., as announced on September 19, 2011.
Results for the third quarter and first nine months 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 via live webcast at www.luxottica.com.
