Luxottica Group reported net sales declined 1.2 percent to €1.84 billion ($2.52 bn) in the first quarter as exchange rates trimmed sales by more than -5 percent, compounding challenges presented by harsh weather in North America that curbed sales of its sunglasses and prescription eyewear. Sales increased 4.2 percent in currency-neutral (c-n) terms as demand in emerging markets and a rebounding Europe helped offset a difficult quarter in North America. Sunglass Hut, Ray-Bad and Oakley continued to be top-performers.



Group operating margins were flat at 14.7 percent of net sales, and up 60 basis points in c-n terms. Net income reached €157 million compared to €159 million ($215mm), or 45 cents per share in the first quarter of 2013, corresponding to an earnings per share of 45 cents.

 

“In the first quarter of the year we performed overall better than the figures say,” said Andrea Guerra, Chief Executive Officer of Luxottica. “The Wholesale Division continued its robust growth trend supported by all our main brands, first and foremost Ray-Ban and Oakley. The Retail Division performed well despite a winter season in North America affected by heavy snow and ice storms. Sunglass Hut started the year with an excellent 11.1 percent increase in net sales (c-n) globally.”

 

At the Wholesale Division, net sales increased 3.0 percent to €805 million, up 7.9 percent c-n compared to the first quarter of 2013. In c-n terms, sales rose 7.3 percent in Europe, 7.0 percent in North America and 6.8 percent in Emerging Markets with Ray-Ban and Oakley driving growth. Sales grew at double- digit rates in the United Kingdom, Germany and the Nordic countries. Top-performing emerging markets were India and Brazil. At the end of April, orders for the company’s new sunglass collections were up 10 percent from a year earlier.

 

Operating income increased 2.9 percent to €194 million, or 24.1 percent of next sale, which was in line with the first quarter of 2013 at current exchange rates, up 90 bps c-n.

 

Results at the Retail Division were adversely affected by persistently volatile exchange rates together with harsh weather in North America, which suppressed traffic from older prescription eyewear customers in the Northeast and Midwest portions of the United States. Sales declined 4.2 percent to €1.04 million, which equated to a 1.6 percent c-n gain. Comparable store sales were up 1.9 percent for the Retail Division. In the United States, sales growth resumed in April, when sales were running 2 percent ahead of a year earlier.

 

At Sunglass Hut, net sales climbed 11.1 percent c-n compared to the same period of 2013. In North America, comparable store sales accelerated to double digits in April and are running 3.3 percent above first quarter levels. In the United States, sales for the first four months of the year are running 6 percent above the comparable period in 2013. In emerging markets, Sunglass Hut’s comparable store sales growth increased double-digits in Brazil, Mexico and South Africa.

 

In the first quarter of 2014, the Retail Division’s operating income declined 5.9 percent to €124 million compared to €132 million in the same period of 2013. As a result, the operating margin dropped 20 basis points to 12.0 percent (+20 bps c-n).