Luxottica Expects Wholesale Division to Grow 15 Percent This Year

Luxottica disclosed the plans along with financial data that showed its total net sales grew 7.3 percent in 2011.

2012 will be a particularly important year for Oakley, after six consecutive years of double-digit growth, a trend that is expected to continue into 2012. Oakley has succeeded in building exceptional relationships with top athletes in a variety of sports and will benefit from enhanced exposure at the London Olympics where it is also a sponsor.

Further benefits will also arise from the expansion of the OCP program (Oakley Custom Program), a key driver of business growth, creating opportunities for Oakley's entire digital platform. Investments in India, China, Brazil and Europe will also continue and sales in these areas are expected to grow significantly, owing to stronger investments in style and technology for the optical segment.

Luxottica said total net sales for the 12 months ended Dec. 31, 2011 exceeded €6.2 billion ($8.6bb), an unprecedented result for Luxottica, as compared to the previous record of €5.8 billion in 2010 (+7.3 percent at current exchange rates and 9.9 percent at constant exchange rates).

The year’s operating performance once again confirmed the success of Luxottica’s strategy of increasing profitability. More specifically, adjusted EBITDA for the full year grew significantly (+9.8% compared to 2010) totaling €1.14 billion ($1.59bb). The adjusted EBITDA margin increased from the 17.8% recorded for 2010 to 18.3% in 2011.

 

In the fourth quarter of 2011, adjusted EBITDA showed a 16.6% increase from the same period of the previous year, to €224.7 million ($304mm), with an adjusted EBITDA margin of 14.9% (14.3% in the fourth quarter of 2010).

Growth in adjusted operating income for 2011, amounting to €820.9 million ($1.1bb), up 12% from the figure recorded at the end of 2010. The Group’s adjusted operating margin therefore increased from 12.6% for 2010 to 13.2% for 2011.

 

In the fourth quarter of the year, adjusted operating income was €139.3 million ($188.4mm) as compared with €116.6 million recorded for the same period of the previous year (+19.5%), with an adjusted operating margin up from 8.7% to 9.2%, thus confirming the effectiveness of the measures taken to improve profitability.

The company said operating income of the Wholesale Division reached €529.1 million ($738mm) (+14.6 percent over 2010), with an operating margin of 21.5 percent (+80 bps as compared with the previous year). In 2011 the Retail Division recorded adjusted operating income of €448.7 million ($526mm), up 5.7% from 2010, with an adjusted operating margin of 11.9%, in line with the previous year. Adjusted net income for the year amounted to €455.6 million ($635mm), up 13.1% from €402.7 million for last year, corresponding to adjusted Earnings per Share (EPS) of €0.99.

 

In the fourth quarter of 2011, adjusted net income went from €55.6 million to € 72.7 million ($101mm) (+30.8%).

By carefully controlling working capital, the Group generated strong free cash flow4, reaching approximately € 500 million during the year. As a result, net debt4 as of Dec. 31, 2011 decreased further, falling to €2.03 billion (€2.11 billion at the end of 2010), and the ratio of adjusted net debt to EBITDA was 1.7x, as compared with the 2.0x at the end of 2010.

For 2012, a further decrease in financial leverage is expected.

Luxottica’s wholesale brands also include Vogue, Persol, Oliver Peoples, Arnette and REVO, while licensed brands include Bvlgari, Burberry, Chanel, Coach, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Tiffany and Versace. In addition to a global wholesale network involving 130 different countries, the Group’s Retail Division manages leading retail chains in major markets, including LensCrafters, Pearle Vision and ILORI in North America, OPSM and Laubman & Pank in Asia-Pacific, LensCrafters in China, GMO in Latin America and Sunglass Hut worldwide. The Group's products are designed and manufactured at its six manufacturing plants in Italy, two wholly owned plants in the People’s Republic of China, one plant in Brazil and one plant in the United States devoted to the production of sports eyewear.

 Luxottica Group   (in millions of Euro)