Arnette's Parent Company, Luxottica, Sees Strong Growth In Net Sales for 2Q 2008
Surfeyes.com: The Board of Directors of Luxottica Group, a global leader in the design, manufacturing and distribution of premium fashion and luxury eyewear, convened today in Agordo by chairman Leonardo Del Vecchio, approved financial results for the three- and six-month periods ended June 30, 2008.
Andrea Guerra, chief executive officer of Luxottica Group, commented: “This year our Group is facing two significant challenges: the further significant devaluation in the U.S. currency against the Euro, which has reached approximately 13% year-to-date, and a slowdown in the global economy, particularly in North America.
We have been taking steps to proactively tackle the second challenge, including significant transactions such as the merger with Oakley. In fact, we are already seeing the benefits of these actions: for the quarter, consolidated sales at constant exchange rates rose by 12.6%, while net income5 in U.S. dollars rose by 8%. This resulted in an outstanding net income margin for the quarter of nearly 10%.
“Final results for the second quarter confirmed that we are on track to meet the previously announced financial outlook for the full year. For this, I am especially proud of our entire organization because, while the first half of this year was clearly challenging, the true strength and resilience of our business model was reflected in our ability to withstand and to quickly and efficiently react to the difficult market conditions that we faced in the period.
Additionally, phase one of the Oakley integration is now nearly complete within only seven months of the merger and the business is already positively contributing to overall results.
“I am very pleased with our underlying performance for the quarter in North America, where pro forma sales were flat. Our results were well above those of the overall market and key peers. The initiatives taken to bring costs in line with the current environment have made our overall business model in the North American market more sound for the longer term. And, profitability has already improved significantly from the first quarter of this year.
“Total wholesale sales for the quarter, including Oakley, rose year-over-year by 21.2%, reflecting the 13th consecutive quarter of double-digit growth. Within this business, we continued to see positive performances, especially in North America, and achieved overall satisfactory results in continental Europe and emerging markets, while seeing a slowdown in southern Europe and Japan.
At the same time, we believe we are extremely well positioned to tackle the challenges ahead due to: a truly global presence; the ability to forge even closer relationships with key clients; the investments made over the past few years in an ever-stronger and increasingly effective organization; and, the strongest and most well-balanced brand portfolio in the industry.
Additionally, following several years of continued strong growth in manufacturing capacity to manage demand, today we are able to realize efficiencies and increasing quality levels within our manufacturing operations.”
In terms of brands, both Ray-Ban and Oakley posted another strong quarter, while luxury brands showed some signs of weakness as a result of the overall challenging environment. In particular, Ray-Ban continued to grow due, in part, to the strength of the Wayfarer, which is now the second best-selling model worldwide.
Oakley, on the other hand, was outstanding across all regions, due, in part, to strong performances by its athletes and anticipation of the brand’s expected strong visibility at the upcoming Olympics in Beijing. The merger with Oakley is one of the most important developments in our business of recent years.
Only twelve months after the announcement of the transaction, the new journey on which the Group has embarked continues to make significant progress: the integration of the European portion of the Oakley business was completed as of the end of the second quarter; the new teams are already on the ground and making a difference;
The sports channel is ready; the new emerging markets structure is up and running; the focus within retail has been on cross-selling opportunities at LensCrafters and Sunglass Hut and the integration of Oakley’s retail chains Sunglass Icon and Bright Eyes into Luxottica’s existing retail structure. Finally, most other phase one projects, including sourcing and sun lens strategy, have either been completed or are nearing completion.
Management now expects that one-time charges in connection with the merger with Oakley will be a total of €20 million, compared with the previously expected €25 million, resulting in a slightly lower impact of these charges on the second half of this year.
Luxottica Group’s consolidated net debt3 on June 30, 2008, was €2,839.7 million, reflecting a consolidated net debt to pro forma EBITDA ratio(3) of 2.6x. Free cash flow generation for the quarter was again particularly positive, further underlining the strength of our business model.
Today the Group’s Board of Directors also approved the Company’s financial results for the six-month period ended June 30, 2008 in accordance with International Financial Reporting Standards (IFRS).
- Surfeyes.com
