Luxottica's Q1 sales hit by bad weather in Europe
Luxottica closed the first quarter of 2018 with sales down by 0.8 percent at constant exchange rates and 10.7 percent at current exchange to 2,136 million euros (2,591 million dollars), which the company said were due to the temporary slowdown in Europe caused by a delayed sun season and the restructuring of the wholesale business in China.
"The decrease in quarterly sales, which were mainly impacted by unfavourable weather conditions in Europe, does not affect the group’s quarterly profitability, which remains sustained and solid,” said Leonardo del Vecchio, Luxottica’s Executive Chairman in a media release, adding, “The many positive signals from the markets, such as the excellent performance of Sunglass Hut and our e-commerce platforms, push us to look at the results of the whole year with confidence and confirm our outlook for 2018."
Luxottica’s Q1 wholesale net sales down 4.2 percent
Luxottica added that wholesale division’s net sales were down 4.2 percent at constant exchange rates affected by the negative performance of Europe, where unfavourable weather led to the postponement of orders in March, a month which typically generates half of the wholesale sales for the quarter. The company added that new commercial policies for European online operators and wholesale customers, and the completion of the restructuring of the distribution in China also affected quarterly net sales.
The retail division sales grew by 1.3 percent at constant exchange rates, with comparable store sales down by 0.6 percent. Positive sales, Luxottica said, were driven by Sunglass Hut in North America, where comparable store sales rose 7.6 percent, retail brands in China and Australia, Target Optical and the e-commerce business worldwide, which recorded a sales increase of 16 percent driven by Ray-Ban.com and SunglassHut.com. These positive results, the company added, offset the slowdown of the sun segment in Europe and negative sales of LensCrafters, which is still focused on transforming its business model.
Highlights of Luxottica’s Q1 across core markets
In the first quarter of 2018, North America recorded net sales at constant exchange rates in line with those of the same period last year. The Wholesale division grew by 0.5 percent at constant exchange rates, due to the solid growth of Ray-Ban, especially in the sun segment, as well as the key accounts and e-commerce business. The retail division reported unchanged sales compared to the first quarter of last year at constant exchange rates. The excellent performance of Sunglass Hut, Target Optical, Pearle Vision, group’s e-commerce platforms - mainly Ray-Ban.com and SunglassHut.com and EyeMed in Managed Vision Care, the company said, fully balanced the still negative sales of LensCrafters.
After twelve consecutive quarters of solid growth, Europe reported a decline of 4.1 percent at constant exchange rates due to the combined effect of the standardization of commercial policies and the delay in the beginning of the sun season in March. The unstable weather conditions in the second part of the quarter penalized the retail business, which still reported a slight increase in net sales compared to the same period of 2017.
Net sales at constant exchange rates in Asia-Pacific, Luxottica added, remained almost unchanged during the quarter. The positive contribution of Australia, Japan, India and travel retail offsets the negative performance of China, where the group is completing the restructuring of its distribution channel in favour of a direct relationship with the final consumer. The region benefited from the excellent performance of the retail business, with the strong growth of Sunglass Hut, OPSM in Australia and LensCrafters and Ray-Ban stores in China.
In the first quarter, Latin America reported sales rise of 2.6 percent at constant exchange rates led by strong contribution of Brazil, where the group also launched a new commercial organization to improve customer proximity and service and positive performance of Óticas Carol. The Retail division benefited from the growth of Sunglass Hut sales and the promising start of the first Ray-Ban stores in the region.
The company also announced that the proposed combination between Essilor and Luxottica was unconditionally cleared by the antitrust authorities in Europe, the United States, Canada and Brazil, four of the five jurisdictions where antitrust approvals are a condition precedent to the closing of the transaction. In China, the proposed combination is still under review by the local antitrust authority. The transaction is expected to close in the first half of 2018 and has also been approved in 14 other jurisdictions: Australia, Chile, Colombia, India, Israel, Japan, Mexico, Morocco, New Zealand, Russia, Singapore, South Africa, South Korea and Taiwan.
Picture:Luxottica media gallery