Luxottica Group S.p.A (NYSE:LUX) reported its retail sales
in North America grew 22.3 percent, or 3.9 percent in currency-neutral (c-n)
terms to €1.09 billion in the third quarter ended Sept. 30, despite declining
traffic.

 

 “We saw lower traffic
than a year ago in many cases, and many parts of the U.S. with flat traffic,” Luxottica
co-CEO Adil Khan said Oct. 26 during the company’s third-quarter earnings call.
“The areas that were most affected were the tourist areas,” such as New York
and Miami, where foreign visitors have reduced buying power against the strong
dollar.

 

Kahn attributed the growth to higher conversion rates, which
he said reflected the right mix of assortments, promotions and a strong
performance by retail associates. The increase was driven primarily to Sunglass
Hut, where same-store sales growth accelerated to 7.8 percent compared to the
first half of 2015. At LensCrafters, same-store sales increased by 3.8 percent
compared to the first half of 2015.

 

Sales at the North American Wholesale Division grew 24.5
percent (7 percent c-n) to €265 million. In addition to owning Oakley, Ray-Ban
and a few fashion brands, the division designs, manufactures and distributes
eyewear under dozens of licensed fashion brands to the department store,
optical and luxury channels.

 

Oakley integration
completed

Luxottica disclosed it would record a pretax restructuring
charge of €14 million in the third quarter to reflect the costs of absorbing
Oakley’s North American operations. As reported in late July, Luxottica took a
€20 million pre-tax restructuring charge in the second quarter to reflect
severance and other costs incurred eliminating Oakley’s global management team
and 400-employee European headquarters. Khan said the integration of Oakley is
now complete and on track to yield €50 million in incremental operating income
by 2017.

 

“Now that that's behind us I think our only task on Oakley
is to grow,” said Khan. “The Olympics is coming up in nine months. And so now
all the energy goes into making that a real Oakley moment.”

 

Co-CEO Massimo Vian said Luxottica is also focusing on
opening Sunglass Huts worldwide and revamping its LensCrafters optical chain in
North America.

 

“I expect that when we give guidance for next year, you will
see a more aggressive retail number versus the past,” Vian said. “I'm not sure
if it has to come at the expense of wholesale, but certainly you'll see a
better number in retail than the past.”

 

Luxottica total net sales in North America grew 22.8 percent
(4.5 percent c-n) to €1.36 billion, or to 62 percent of total revenues,
compared with 58 percent in the third quarter of 2014.