Luxottica confirms 2017 guidance after hurricanes hit third quarter

Ray-Ban maker Luxottica on Monday confirmed its 2017 guidance even after reporting weak third-quarter sales as hurricane-related store closures hit North America, its biggest market.

Luxottica CEO Massimo Vian told Reuters sales growth at the world’s biggest eyewear maker was now more likely to meet the lower part of the range provided as 2017 guidance.

“We confirm our guidance ... we will likely be at the lower end of the range,” Vian said, adding that the first three weeks of October “had a plus sign” both globally and in North America.

Some analysts had flagged the risk Luxottica might have had to tweak its guidance after a disappointing quarter.

Luxottica, which is awaiting antitrust approval of its agreed merger with lens maker Essilor, said in March sales would post ‘low to mid’ single-digit growth this year at constant currencies, with a broadly similar rise in its adjusted operating and net profit.

Sales in North America, which last year accounted for 59 percent of the group total, slumped 9 percent in the third quarter and were still down 4 percent when stripping out the effect of a weaker dollar.

Luxottica said hurricanes in Texas, Florida and Puerto Rico had forced it to close 570 shops, most of them for longer than a week, and had also hurt its wholesale business.

Vian also said a disruption at a data storage supplier had hurt orders at the end of the quarter.

“But even net of weather and ‘infrastructure’ issues, the performance of (the group’s North American optical retailer) LensCrafters since mid-August has been below expectations,” he said.

Vian said LensCrafters’ sales in the crucial ‘back to school’ period had been hurt by the chain’s new promotion strategy aimed at increasing transparency.

“Either we did not explain it well or the initial reception was not good ... lesson learnt,” he said in a phone interview.

Changes at LensCrafters and the bad weather contributed to a 5 percent drop in comparable-store sales.

By contrast sales in Europe, where the group has been expanding its retail network, rose 16 percent at constant currencies in the quarter.

Vian said there were no updates on the approval process for the Essilor merger, which is being reviewed by European Union and U.S. antitrust authorities. He said Luxottica remained confident about the outcome.

Total sales rose 0.8 percent at constant currencies in July-September to 2.15 billion euros, driven by Luxottica’s retail business. This compared with a Reuters’ analyst consensus of 2.17 billion euros.

Taking into account currency moves, third-quarter sales fell 3.5 percent year-on-year.