Luxottica sales down 3.5% in third quarter, 2017 guidance unchanged

Milan, 23rd October 2017 (AFP) - On Monday, Italian eyewear group Luxottica, the world leader in high-end eyewear which is due to merge with French group Essilor, reported a 3.5% decrease in its third-quarter revenue, down to €2.147 billion, but confirmed its 2017 guidance.

The figure is on the whole consistent with expectations: according to estimates by Factset, analysts predicted a revenue of €2.164 billion. Luxottica explained the result as being due to the strength of the euro compared to other main currencies. At constant exchange rates, sales growth was equal to 0.8%.

At current exchange rates, the revenue for North America, Luxottica's main market with 61% of sales, fell by 9% in the period. The group's local performance in September was affected by the three hurricanes which hit Texas, Florida and Puerto Rico, leading to 570 store closures, most of them in one single week. A quarter of Luxottica's stores in Mexico had instead to close down temporarily, owing to the earthquake which hit the Central American country. In Asia-Pacific, sales lost 5.2%, but in Europe they grew by 14.2%.

In the first nine months of the year, Luxottica's consolidated revenue rose 1.7% to €6.9 billion, the increase being 1.5% at constant exchange rates. "We are satisfied with the results obtained in July and August, months in which the group's business showed robust growth. Unexpected events in September affected our sales in North America, Mexico and China. Yet, despite all this, and the extreme volatility of exchange rates, we closed the quarter with a [revenue] increase (at constant exchange rates)," said the Executive President of Luxottica, Leonardo del Vecchio, and its General Manager Massimo Vian.

They also mentioned the transformation process in which Luxottica is engaged, and confirmed the guidance for 2017, i.e. a single-digit sales growth (in the low-to-medium end of the range) at constant exchange rates. "We are confident that the many initiatives that have been taken in the course of the last two years can lead to a faster growth rate in 2018," they added.

Luxottica is due to merge soon with Essilor, the world number one in ophthalmic optics, forming a world optics giant with a stock market capitalisation in excess of €50 billion. On 26th September, the European Commission launched an in-depth enquiry into the merger, fearing it might endanger competition.

The EC decision was widely expected, since a number of analysts highlighted the worries caused by the creation of such an entity, which would become a dominant supplier for a high number of opticians.

The future eyewear leviathan, which will be based in the outskirts of Paris, where Essilor is currently located, will have a revenue of over €15 billion and more than 140,000 employees worldwide. The EC inquiry's closing date is 26th February 2018.