Luxottica’s North American Sales Grow 20% in Q4

Comparable store sales for the fourth quarter were up by 8% as compared to the same period in 2009, thanks to LensCrafters (+5.6%) and especially to the excellent performance of Sunglass Hut (+18.0%), which enjoys a worldwide leadership position as the global sun specialty chain.

The performance of the Wholesale Division was particularly positive in all countries in which the Group operates, with excellent results in North America (+19.7%) and solid growth in emerging markets (+17.5%), thus confirming the success of the Group's investments and commercial policies. It also continued to perform well in more mature markets, such as Europe (+5.4%), especially in the so-called New Europe.

Overall, the Group's net sales for the fourth quarter were Euro 1,346.5 million, up 16.4% over the same period of the previous year (+6.5% at constant exchange rates).

Thanks to the strong growth enjoyed throughout all quarters of the year, consolidated net sales for fiscal year 2010 reached the unprecedented figure of almost Euro 5.8 billion ($7.9 bn) – never before seen in the history of Luxottica. Sales grew 13.8% at current exchange rates and 7.1% at constant exchange rates.

“2010 was a year of discontinuities,”Guerra said. “The new world in which we find ourselves operating has shown us that success is possible through innovation, investment, determination, simplicity and speed.

“Throughout the year, Luxottica posted increasingly improving results, both in terms of net sales and profitability. The cornerstones of our business model once again proved to be particularly solid and both Divisions have thus successfully achieved excellent results.

“Worthy of mention are: the performances of two extraordinary brands – Ray-Ban and Oakley; the continuing recovery of the premium and luxury brands in our portfolio, which include prestigious brands such as Chanel, Prada, Dolce & Gabbana, Tiffany and Burberry; and the exceptional results achieved by Sunglass Hut, the result of hard work and commitment by the new organization, along with the strong performance of LensCrafters, now firmly reestablished as a point of reference for the North American optical retail sector after posting for 2010 its highest growth in comparable store sales since 2006.

“I firmly believe that if we keep up this good work, 2011 will prove to be the natural evolution of the year that has just drawn to a close, and Luxottica will thus continue to post solid, stable growth and increased profitability. The start of the new year already looks encouraging.”

At the operating level, the Group's performance for the year once again confirmed the success of Luxottica's strategy to increase profitability. More specifically, consolidated EBITDA for fiscal year 2010 is expected to grow significantly (approximately +20%, compared with 2009), thereby exceeding Euro one billion.

The company also expects consolidated net income for the year to be in line with the Group's forecasts, at more than EUR 400 million, up by approximately 35% from EUR 299.1 million for last year.

By carefully controlling working capital, the Group generated strong free cash flow for the year, which remained at excellent levels.

Consequently, consolidated net debt as of Dec. 31, 2010 is expected to decline further, to approximately EUR 2,140 million ($2.9 bn) (compared with EUR 2,337 million as of December 31, 2009), with a consolidated net debt to EBITDA ratio of approximately 2.1X, compared with 2.7X as of the end of the previous year.

Overview of performance at the Wholesale Division

During the fourth quarter of 2010, the Wholesale Division confirmed its continued improvement of results, thanks to strong performance in emerging markets, the success of the commercial initiatives implemented, particularly in the optical business, and the confirmed growth trends of the premium and luxury brands, with an increasing number of consumers worldwide once again showing interest in these product brands.

Net sales for the fourth quarter were EUR 513.5 million ($698.4 mm) (+14.4% at current exchange rates, and +7.4% at constant exchange rates). For the full year, net sales were EUR 2,236.4 million ($3.04 bn) (+14.4% at current exchange rates, and +9.0% at constant exchange rates).

In terms of sales trends in the main geographic areas, Luxottica recorded excellent performances in all geographic areas in which it operates, with peaks in North America, Brazil, Mexico, India, South Korea, Japan and the countries of the so-called New Europe.

The beginning of 2011 looks to be particularly promising thanks to a well-filled order portfolio that has enjoyed double-digit percentage growth over the same period of 2010. The growth trend of the entire premium and luxury brand portfolio also shows significant further improvement.

Overview of performance at the Retail Division

In the fourth quarter of 2010, the Division continued to record good results. A renewed attention to the customer, special initiatives and targeted promotions helped all retail brands in North America to record growth in comparable store sales: comparable store sales4 over the same quarter of 2009 at LensCrafters were up by 5.6%, at Pearle Vision by 3.4% and at Sears and Target by 7.0%.

Sunglass Hut, the Group's sun specialty chain that operates in a number of geographic areas, posted particularly significant results, recording total comparable store sales for the fourth quarter showing very strong growth (+12.9%), with an extremely positive trend in the United States (+18.0%).

On the contrary, comparable store sales4 in the Asia-Pacific region, where the outlook of the retail sector in that market continues to be particularly demanding, were negative, albeit with a continued, marked improvement over previous quarters thanks to the Group's initiatives (-7.6% for the fourth quarter, from -13.4% for the third quarter of 2010). However, the trend seen within the quarter was, in turn, positive: in December comparable store sales performance was
only slightly negative.

Positive trends have also been recorded in all the markets with the highest growth rates where the Retail Division operates, such as China, India, South Africa and the Middle East.

Net sales for the Retail Division were Euro 833.0 million ($1.13 bn) (+17.6% at current exchange rates, and +5.9% at constant exchange rates2). For the year, net sales were up by 13.5% at current exchange rates to Euro 3,561.6 million ($4.84 bn) (+5.9% at constant exchange rates).

For 2011, forecasts are positive for the Retail Division. In the United States, Luxottica expects to benefit on the one hand from the significant work implemented in-house, and on the other from the improving confidence seen by consumers in that market: January results are encouraging.

In Australia, a region in which the Group has placed very high expectations, the company expects that the various initiatives launched in that market will generate further significant improvements in 2011: the trend is already improving and results are expected to soon go back to being positive.

For 2011, the company also expects an acceleration in emerging markets, and in China in particular.