For the first quarter of 2009, Luxottica posted sales of Euro 1.31 billion ($1.72 billion), compared to Euro 1.40 billion ($2.10 billion) for the first quarter of 2008 (down by 6.2% at current exchange rates and by 11.6% at constant exchange rates). 


During the first quarter of 2009, Luxottica maintained a high level of cash flow, with free cash flow generation of nearly Euro 80 million ($104.6 million)


The first quarter of 2009 was a particularly challenging period for the eyewear market due to the structural changes that it is currently undergoing. Demand and the market in general were affected by three main factors: consumer attitudes, rapid reduction in inventories by clients in all geographical areas and the slowdown in the global economy.


The impact from the reduction in inventory levels by clients was particularly evident in the results of the Wholesale division, where sales were down by 19.0% after 20 consecutive quarters of growth.


Management said the second quarter will be critical in terms of achieving results for the full year and it has already begun more positively than the trend of the last few months. The macro-economic environment is still not positive, but it is improving.

 

Consolidated results for the first quarter

Consolidated sales were Euro 1.31 billion, ($1.72 billion),  compared to Euro 1.40 billion ($2.10 billion) for the first quarter of 2008 (down by 6.2% at current exchange rates and by 11.6% at constant exchange rates).


Consolidated EBITDA was down year-over-year by 16.6% to Euro 229.6 million ($300.3 million) from Euro 275.3 million ($412.3 million.) Consolidated EBITDA margin for the period declined to 17.5% from 19.7% for the first quarter of 2008.


Consolidated operating income for the quarter was Euro 156.7 million, ($205.0 million) compared to Euro 207.1 million ($310.2 million) (down by 24.3%) for the first quarter of 2008. Consolidated operating margin was 11.9% for the quarter while it was 14.8% for the same period last year, thanks to particularly strong results by the Wholesale Division for that period.


Consolidated net income was Euro 80.4 million ($105.2 million) for the quarter, compared to Euro 103.7 million ($155.3 million) (down by 22.5%) for the same period last year. This result reflected earnings per share (EPS) of Euro 0.18 (24 cents) (at an average Euro/U.S. Dollar exchange rate of approximately 1.30). In terms of EPS in Euro before trademark amortization(2), the decrease would have been limited to 20.1%.


At March 31, 2009, Luxottica's net debt position was Euro 2.96 billion ($3.20 billion) (compared to Euro 2.95 billion, or $4.34 billion) at the end of 2008), while the ratio of net debt to EBITDA was 3.1x (3.0x net of currency exchange effects), compared to 2.9x at December 31, 2008.


Wholesale Division


Wholesale sales for the period were Euro 501.6 million, ($656.1 million) compared to Euro 619.6 million ($928.0 million) (down by 19.0% at current exchange rates and by 19.8% at constant exchange rates). Regarding sales in key geographical regions, Luxottica's performance was substantially positive in Continental Europe and South America, while sales were down in Southern Europe, North America and the Far East.


In March and April, wholesale orders trended positively, reflecting recovery in Europe. May, June and July will be key months for determining the trend for the year.


Operating income for the Wholesale Division was Euro 105.3 million ($137.7 million) for the first quarter of 2009, (down by 32.8% from Euro 156.7 million, or  $ 234.7 million, for the first quarter of 2008.


 The Wholesale Division's operating margin was 21.0% for the quarter, compared to 25.3% for the first quarter in 2008.

Retail Division


Sales for the Retail Division improved to Euro 810.8 million ($1.06 billion)for the first quarter of 2009, from Euro 779.1 million ($1.17 billion) for the same period in 2008 (up by 4.1% at current exchange rates, down by 5.0% at constant exchange rates). Thanks to cost control initiatives, the Retail Division's operating income was substantially in line with the same quarter in the previous year (Euro 83.6 million, or $109.4 million, compared to Euro 84.5 million, or $126.6 million) for last year's first quarter, reflecting a decline of 1.1%).


Consequently, the Retail Division's operating margin for the first quarter of 2009 declined to 10.3%, from 10.8% for the first quarter of 2008.

In terms of comparable store sales, the optical business in North America saw a decline (by 4.6%) during the first quarter of 2009, notwithstanding the excellent results by Pearle Vision, Sears Optical and Target Optical. In Australia, the trend in comparable store sales was positive once again (up by 1.5%).


Sunglass Hut, the group's sun specialty chain that operates across several geographic regions, reported overall comparable store sales down by 10.3% in the first quarter of 2009 compared to the same period last year, with highly positive trends in Australia and New Zealand, South Africa and the UK but again negative in North America.