Luxottica Group S.p.A. consolidated net sales increase 8.1% to €1.33 billion ($1.79 bn) for the second quarter. Excluding the impact of currency exchange rates, sales increased 12.8% in the quarter.  Total retail sales increased 1.0% to €848.0 million ($1.14 bn) or increased 6.7% in currency-neutral terms. Retail comparable store sales improved 1.5% in the quarter. Total wholesale sales jumped 17.5% to €571.3 million ($769.8 mm) or 20.5% currency-neutral. Consolidated operating income increased 26.3% to €262.5 million ($353.7 mm) with a 19.8% operating margin. Retail operating income decreased 10.6% to €103.8 million ($139.9 mm), but was more than offset by a 21.9% jump in wholesale operating income to €164.7 million ($221.9 mm). Consolidated net income grew 32.9% to €154.6 million ($208.3 mm) or €0.34 per share ($0.46).


Andrea Guerra, chief executive officer of Luxottica Group, commented: “We are pleased to report positive results for the first half of the year, which were strong across the board notwithstanding further depreciation of the U.S. Dollar against the Euro in the period. In fact, consolidated sales for the quarter rose year-over-year by 13% excluding the impact of exchange rates. Similarly, results of the wholesale division continued to reflect strong growth in this segment of our business as the second quarter of this year was the ninth consecutive quarter for which we enjoyed double-digit growth in sales, while representing an all-time high in terms of profitability. At the same time, we continued to strengthen our retail business, with the addition of a total of approximately 870 new and acquired stores since June 2006.


“Our teams around the globe and across both wholesale and retail are working hard to make sure we are in a position to deliver another record year. Consolidated operating income for the first half rose year-over-year by 20.3%, while consolidated operating margin improved over the period by 200 bps to 18.5%. Thanks to these results, today we are able to raise our forecast for the full year. We now forecast a growth in consolidated earnings per share (EPS) of between 26% and 29% at constant exchange rates (between 23% and 25% excluding the above mentioned non-recurring gain related to the sale of a real estate property in May 2007). At an average exchange rate of Euro 1 = US$1.35, this would result in consolidated EPS for fiscal year 2007 of between €1.11 and €1.13 (between €1.08 and €1.10 excluding the above mentioned non-recurring gain related to the sale of a real estate property in May 2007).


“Finally, in North America we are working to launch a new luxury retail concept under the ILORI brand over the next few months to serve ever-stronger demand in this segment. We believe that our Group is well-positioned to serve this demand, especially since, in our view, no other eyewear retail brands are currently in a position to provide consumers with the full luxury experience they demand.”


Wholesale Division


The second quarter of the year was the ninth consecutive quarter of double-digit growth for the wholesale division, reflecting the strength of the Group's business in this segment. Ray-Ban posted yet another quarter of double-digit growth, and the performances of the Bvlgari, Chanel, Dolce&Gabbana, Prada and Versace luxury brands were similarly positive. During the quarter, the Group concluded the first phase of the launch of the new Polo Ralph Lauren license. Total wholesale sales in emerging markets for the quarter rose year-over-year by over 50%. Wholesale sales to third parties for the quarter, a key measure of the Group's wholesale business, rose year-over-year by 23.5%, while wholesale operating margin rose year- over-year by an additional 100 bps, reaching an all-time high of 28.8%.


Retail Division


In the second quarter, the retail division enjoyed a significant improvement in sales of 6.7% excluding the impact of exchange rates. This result reflects the focus of the Group on building a solid platform for the long-term growth of the retail business. During the course of the past 12 months, the Group opened 395 new stores while adding 479 stores through acquisitions in the U.S., Canada, China, South Africa and Australia. Among these stores, 462 new and existing North American-based stores and 279 stores acquired in China, the U.S. and Canada were rebranded to one of Luxottica's retail brands.


Other


Luxottica Group's consolidated net outstanding debt on June 30, 2007, was euro 1,492 million. On the same date, the Group's net debt to EBITDA ratio improved further to 1.4x, from 1.7x on June 30, 2006. Additionally, the Group generated €44 million in free cash flow for the quarter before dividends, acquisitions and the impact of exchange rates, reflecting the strength of its business model and ability to generate strong cash flow levels.


Other Corporate Developments


On April 25, 2007, pursuant to a December 12, 2006 order issued by the Supreme Court of India, the Group launched a public offer through its subsidiary Ray Ban Indian Holdings, Inc., to acquire up to 4,895,900 shares of Bombay-listed RayBan Sun Optics India Ltd., which offer was subsequently raised 7,545,200 shares of RayBan Sun Optics India. 6,454,280 shares were tendered for a total consideration of approximately euro 13 million in the offer, which closed on May 14, 2007. Effective upon the entry of the share transfers in the share register on June 26, 2007, the Group's stake in RayBan Sun Optics India increased to approximately 70.5%.