Luxottica Group, which just announced plans to merge with French lensmaker Essilor International SA, said its adoption of stringent “MAP policy” guidelines led to a rebound in wholesale sales in North America in its fourth quarter. Results also benefited from the integration of the Oakley sports channel.
The parent of Oakley, Ray-Ban and Sunglass hut said sales at constant exchange rates in the quarter were up 5.5 percent and 3 percent for the wholesale segment and the whole group, which includes its retail operations. By contrast, sales in the third quarter on a currency-neutral basis were largely unchanged as a drop of 11 percent in wholesale sales offset a 2.4 percent gain in retail sales.
For the full year, net sales at constant exchange rates in North America were up 0.8 percent. Retail segment sales grew 1.7 percent at constant exchange rates, thanks to the positive performance of LensCrafters and Sunglass Hut. Wholesale was off 2.6 percent due to the adoption of the “MAP policy.”
Companywide, sales in the fourth quarter accelerated compared to the previous quarters of 2016, with reported revenue growth of 5.2 percent at constant exchange rates and up 6.3 percent at current exchange rates. That compares to gains in the third quarter of 3.2 percent overall on a reported basis and 3.5 percent on a currency neutral basis.
Luxottica ended the year with reported net sales of €9.1 billion, up 3.9 percent at constant exchange rates and 2.8 percent at current exchange rates.
In 2016, the wholesale segment’s net sales remained almost unchanged from the previous year at constant exchange rates. On the upside, the Retail segment delivered reported net sales growth of 6.8 percent at constant exchange rates and grew 6.0 percent at current exchange rates. Sunglass Hut saw revenue growth of 8.1 percent at constant exchange rates, while LensCrafters in North America grew 1.3 percent in U.S. dollars.
E-commerce sales jumped 24 percent at constant exchange rates, led by Ray-Ban.com, Oakley.com and SunglassHut.com.
By region, the strongest performances came in Europe and Latin America.
In Europe, sales grew 12 percent on a currency-neutral basis in the fourth quarter and gained 6.9 percent for the year on the same basis. Wholesale segment posted net sales up by 2.8 percent at constant exchange rates, driven in particular by Italy, the UK, Spain and Eastern Europe. The Retail segment’s sales jumped 28 percent at constant exchange rates due to the strong performance of Sunglass Hut and expansion.
Latin America’s revenues expanded 10 percent on a currency-neutral basis in the year with a similar gain seen in the fourth quarter. For the year, Mexico achieved double-digit growth at constant exchange rates, pacing the gains. Brazil grew despite economic challenges. The retail segment in the year posted double-digit growth at constant exchange rates, thanks to the favorable comps of GMO and Sunglass Hut in Mexico and the Andean region.
In the Asia-Pacific region, sales were down 1.9 percent in 2016. The termination of relationships with a number of distributors in China resulted in the withdrawal of goods from the marketplace in the fourth quarter for a value greater than 30 percent of quarterly sales. Wholesale sales in China returned to growth in the first few weeks of 2017. Southeast Asia, India and Japan saw solid growth for the year
“We are very pleased with the results of 2016, especially given that they were achieved in a year of major investments and initiatives to improve the quality of the company and we expect to report a higher net profit on a year-over-year adjusted3,5 basis”, commented Leonardo del Vecchio, executive chairman, and Massimo Vian, CEO for product and operations of Luxottica Group.
He added, “The courageous decisions taken in the last two years and the investments aimed at improving the Group’s offering with more innovative and excellent products and services are reflected in the net sales generated during the final months of the year, showing an improvement especially in North America. The first few weeks of 2017 confirm the Group’s prospects for healthy growth that we expect will accelerate during the year.”
In mid-January, Luxottica announced plans to merge with Essilor International SA in a €46 billion ($49 billion) merger to create a global eyewear powerhouse.
