Luxottica Group S.p.A., the parent of Oakley, Ray Ban and Sunglass Hut, reported revenues in the first quarter rose 4.2 percent, or 5.6 percent on a currency-neutral (c-n) basis. Wholesale revenues rose 5.6 percent c-n, while retail revenues improved 3.1 percent c-n. Operating profits adjusted to exclude special items rose 7.7 percent in currency-netural terms.
Luxottica also makes eyewear under various designer brands and owns Ray Ban. On the retail side, it owns LensCrafters, Pearle Vision and SunGlass Hut.
Total revenues reached €1.86 billion, up 4.2 percent from €1.78 billion. Wholesale Division revenues rose 7.5 percent to €781.7 million. Retail Division sales improved 2.0 percent to €1.083 billion.
Operating income climbed 17.6 percent to €275.2 million, and increased 7.7 percent on a c-n basis.
Net income rose 23.5 percent to €159 million, or €34 cents a share, from €129 million, or €28 cents, a year ago. On an adjusted basis, net profits gained 10.5 percent to €159 million, or €34 cents a share, from €144 million, or €31 cents, a year ago.
Luxottica’s strong growth continued into 2013 and the Group has a positive and optimistic outlook for its future performance. The first quarter of 2013 saw positive growth in terms of both net sales and profits and confirmed the Groups expectations in terms of robust and continued growth, particularly in emerging markets (+17 percent at constant exchange rates).
Net income for the first quarter of 2013 increased to Euro 159 million (+10.5 percent) from adjusted net income of Euro 144 million reported in the first quarter of 2012. Net sales in the period reached approximately Euro 1.9 billion (+5.6 percent at constant exchange rates1), with double-digit growth in emerging markets (+17 percent at constant exchange rates). The Groups operating income for the period rose to Euro 275 million (+7.7 percent).
The first quarter has marked a strong, solid start to the year, sustained by all of our leading brands in all the geographic areas important to our company,” said CEO Andrea Guerra. “The positive results in the first quarter of 2013 confirmed our expectations for the period and provide a strong basis for another year of growth. We have managed to improve on our record profits and net sales by focusing on the Groups unique and specific assets and continuing to invest in high-potential, fast-growing markets.
We achieved significant growth especially in emerging countries, where net sales increased by almost 20 percent at constant exchange rate,” Guerra continued. “In Brazil, where Luxottica net sales grew 30 percent at constant exchange rates, the merger with Tecnol is now running smoothly, delivering significant benefits as a result of our dedicated focus during 2012. North America, our most important region, once again registered solid growth, after a few jitters in February and a slight pick-up in March, which has continued into April.
Diverse results in Europe
Our brand portfolio is in excellent shape and it is expanding. Ray-Ban and Oakley continued to perform extremely well, retaining their titles as captains in the industry. During the first quarter 2013, in the premium and luxury segment, the licensing agreement with Armani Group became operational and we completed the merger with the iconic Alain Mikli brand, enriching the newly created Atelier Division. We are taking important steps in the development process that aims to make Luxottica the benchmark in an increasingly strategic market segment where we expect to see double-digit growth in 2013.
Looking forward to the next few months, we will continue to invest in our expansion. In particular, the emerging markets are expected to be one of the main drivers of growth, sustained by ongoing investments in people and brands, and by expanding the Retail Division via acquisitions and better penetration of existing channels, especially in Southeast Asia and Latin America.
The important achievements in the first quarter of the year are also the result of the work of all the people at Luxottica who have performed with commitment, competence and determination. Their commitment to quality and excellence allows us to look to the future with optimism and confidence.
The Group
Net sales for the first quarter of 2013 were Euro 1,864 million, up 4.2 percent from the same period in 2012 (+5.6 percent c-n).
EBITDA for the first quarter of 2013 increased by 6.6 percent over adjusted EBITDA in the same period in 2012, reaching Euro 365 million. The EBITDA margin was therefore up from an adjusted 19.2 percent recorded in the first quarter of 2012 to 19.6 percent in the first quarter of 2013.
Operating income for the first quarter of 2013 amounted to Euro 275 million up 7.7 percent from adjusted operating income3,4 of Euro 255 million in the same period of 2012.
The Groups operating margin therefore rose to 14.7 percent in the first quarter of 2013 from an adjusted operating margin of 14.3 percent in the first quarter of 2012.
Net income for the period was Euro 159 million, up by 10.5 percent from adjusted net income of Euro 144 million for the first quarter of 2012, corresponding to earnings per share (EPS) of Euro 0.34.
Net debt as of March 31, 2013 was Euro 1,816 million (Euro 1,662 million at Dec. 31, 2012), and the ratio of net debt to EBITDA was 1.3x compared with a ratio of net debt to adjusted EBITDA of 1.2x at the end of 2012. During the first quarter of 2013, the Group invested approximately Euro 138 million in acquisitions.
Wholesale Division
Total sales for the Wholesale Division rose to Euro 781 million from Euro 727 million in the first quarter of 2012 (+7.5 percent at current exchange rates and +9.3 percent at constant exchange rates).
The Wholesale Divisions operating income amounted to Euro 188 million, up by 9 percent compared with the Euro 173 million reported in the first quarter of 2012, which also was successful for the Division.
The operating margin rose to 24.1 percent from 23.8 percent in the first quarter of 2012.
Sales performance for the Wholesale Division in Luxotticas primary geographic markets saw markedly positive results in emerging markets (approximately +19 percent at constant exchange rates), North America (+9.4 percent at constant exchange rates) and continental Europe (+9.2 percent at constant exchange rates), especially in France, Germany and the Nordic countries.
Net sales in Eastern Europe increased by 19.8 percent at constant exchange rates, while the markets in Mediterranean Europe felt more keenly the effects of the difficult macroeconomic environment.
In the first quarter of the year, the optical business saw robust and continuous double-digit growth, becoming one of the Groups businesses with the greatest potential for growth, capitalizing on favorable international demographic and social trends.
Retail Division
Net sales for the Retail Division were Euro 1,083 million up from Euro 1,061 million in the first quarter of 2012 (+2 percent at current exchange rates and +3.1 percent at constant exchange rates1).
The Division’s operating income for the first quarter of 2013 amounted to Euro 132 million, up by 5.9 percent over the Euro 125 million in adjusted operating income3,4 recorded for the same period of 2012.
The operating margin for the quarter was 12.2 percent up from the adjusted operating margin3,4 of 11.8 percent in the first quarter of 2012.
The Retail Division in North America experienced a solid start to the year. Despite the fact that the month of February was slow in terms of traffic, the Division resumed its positive growth trend in March and this trend has continued into April.
Additionally, during the first quarter of 2013, Australia experienced excellent performance in both the specialized sun store chain (Sunglass Hut) and optical stores (OPSM), producing increased comparable store sales of 16.1 percent at Sunglass Hut and 9.6 percent at OPSM.
