Luxottica Group’s sales in North America declined 3.7 percent in the third quarter and were off 9 percent on a currency-neutral basis.
The eyewear giant said the “restructuring of Oakley’s sport and retail channels and changes in the LensCrafters business still weighed on sales in North America.”
Under changes announced last year, Oakley is being more integrated into Luxottica’s global organization in terms of distribution and marketing infrastructure; reporting directly into Luxottica’s Ohio offices for retail and New York for wholesale, with marketing to be coordinated out of Milan. Oakley’s AFA (apparel, footwear and accessories) business was also reduced.
But the region was also impacted during the quarter by the three hurricanes that hit Texas, Florida and Puerto Rico. Luxottica said its North America segment closed about 570 Group retail stores, most of them for over a week. The company’s retail banners include Sungless Hut, LensCrafters and Pearle Vision. The hurricanes also impacted “thousands of wholesale customers.”
The wholesale business was up 0.5 percent in North America at constant exchange rates and down 5.4 percent at current exchange rates. Gains in the optical channel and department stores was offset by weakness in the sport channel. In the quarter, Ray-Ban sales were up double-digit in the sun segment in the region.
Companywide, revenue inched up 0.8 percent at constant exchange rates in the quarter but slid 3.5 percent at current exchange rates as a result of the strong Euro appreciation. Strong growth in Europe and Latin America and an improvement in Asia-Pacific led the quarterly sales.
The Wholesale division, which showed improvement compared to the second quarter, recorded flat sales (down 0.3 percent at constant exchange rates), thanks to the increase in the average unit price and the positive effect of “MAP policy” in North America. The Retail business grew 1.3 percent at constant exchange rates, benefiting from the contribution of new stores, OPSM’s strong performance in Australia and Ray-Ban stores in China. Comparable store sales were down 5.1 percent due to extraordinary events and the evolution of LensCrafters’ business model.
In a joint statement, Leonardo Del Vecchio, executive chairman, and Massimo Vian, CEO for product and operations of Luxottica, said while “sold growth” was seen in July and August, “unexpected events” impacted Septembers’ results of September hurt sales for the period. These included the hurricanes in North America as well as an earthquake in Mexico and new commercial policies focused on direct sales to the final consumer in China.
“The many initiatives taken in the last two years are bringing clear benefits, particularly the ‘MAP policy’ which in North America supported double-digit growth for Ray-Ban in the sun segment and online,” the executives said in a statement. “The success of OPSM in Australia is another example of a strategic initiative undertaken by the Group with consistency and determination. In the same spirit, we are now leading the change in LensCrafters for the chain’s long-term success, with a new courageous commercial offering for the American market that is clear and transparent, free of a heavily promotional approach and focused on the quality of the products and services.
“Thanks to a return to growth in the first weeks of October and the solid profitability and cash flow of the first nine months, we confirm the outlook for 2017. We are confident that the many initiatives that have been taken in the last two years can lead to acceleration of growth in 2018.”
Luxottica makes eyewear under proprietary brands include Ray-Ban, Oakley, Vogue Eyewear, Persol, Oliver Peoples and Alain Mikli, as well as licensed brands including Giorgio Armani, Burberry, Bulgari, Chanel, Coach, Dolce&Gabbana, Ferrari, Michael Kors, Prada, Ralph Lauren, Tiffany & Co., Valentino and Versace.
Photo courtesy Oakley
