Luxottica Group posted group consolidated sales of 1,354.4 million ($2,126.3 mm), with 583.4 million ($915.9 mm) coming in from wholesale third parties and 771.1 million ($1,210.57 mm) from retail. Luxotticas operating margin over the quarter was 17% for the group, with 25.1% from wholesale and 11.2% from retail. The companys second quarter ended June 30, 2008.
“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 income in U.S. dollars rose by 8%. This resulted in an outstanding net income margin for the quarter of nearly 10%,” commented CEO Andrea Guerra.
She continued to remark that these Q2 results showed that Luxottica is on track to meet the previously-announced financial outlook for the full year.
As for the Oakley merger, Guerra stated that “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.”
According to Guerra, the Q2 performance in North America found flat pro forma sales. Total wholesale sales for the quarter, including Oakley, rose year-over-year by 21.2%, reflecting the 13th consecutive quarter of double-digit growth.
These luxury eyewear brands performed with varying results over the quarter, stated Guerra. “In terms of brands, both Ray-Ban and Oakley posted another strong quarter, while luxury brands showed some signs of weakness Oakley, on the other hand, was outstanding across all regions, due, in part, to strong performances by its athletes and anticipation of the brands expected strong visibility at the upcoming Olympics in Beijing.”
The CEO claimed that Luxotticas merger with Oakley is one of the most important developments for the company in recent years. The integration of the European portion of the Oakley business was completed as of the end of the second quarter.
One-time charges in connection with the Oakley merger are now expected to reach a total of 20 million ($31.4 mm), compared with the previously expected 25 million ($39.2 mm).
Luxottica Groups consolidated net debt on June 30, 2008, was 2,839.7 million ($4,458.13 mm), reflecting a consolidated net debt to pro forma EBITDA ratio of 2.6x. Free cash flow generation for the quarter was again positive.
Second quarter of 2008(1)
Change at current Change at constant
In millions of Euro 2Q08 exchange rates exchange rates
Consolidated sales
Group 1,354.4 +2.1% +12.6%
Wholesale third parties 583.4 +21.9% +28.3%
Retail 771.1 -9.1% +3.8%
Comp. Sales Retail(2) – – -2.8%
Change
Operating margin vs. pro forma (4,5)
Group 17.0% -60 bps
Wholesale 25.1% -20 bps
Retail 11.2% -120 bps
EBITDA margin(3) 21.8% -70 bps
Change at current
exchange rates(5) Change in U.S.$(5)
EPS (in Euro) 0.29 -6.8% +8.0%
– Before trademark
amortization(3) 0.32 -4.5%
First half of 2008(1)
Change at current Change at constant
In millions of Euro 1H08 exchange rates exchange rates
Consolidated sales
Group 2,753.1 +4.8% +14.6%
Wholesale third parties 1,202.9 +27.3% +32.9%
Retail 1,550.2 -7.8% +4.3%
Comp. Sales Retail(2) -2.9%
Change
Operating margin vs. pro forma (4,5)
Group 15.9% -70 bps
Wholesale 24.7% +40 bps
Retail 9.9% -220 bps
EBITDA margin(3) 20.7% -80 bps
Change at current
exchange rates(5) Change in U.S.$(5)
EPS (in Euro) 0.52 -12.9% +0.4%
– Before trademark
amortization(3) 0.57 -9.6% +4.1%
