Luxottica Group S.p.A., the parent company of Sunglass Hut and Ray Ban, reported that fourth quarter consolidated sales rose 6.8% to 1.11 billion, or a 13.4% increase when excluding the effects of currency exchange rates. Retail sales were up 0.4% to 769.0 million, with comp store sales rising 5.7% for the quarter. Total wholesale sales were up 23.3% to 408.7 million, reflecting a 27.3% increase excluding effect of exchange rates.
Full year consolidated sales rose 13.0% to 4.67 billion, or a 13.8% increase when excluding the effects of currency exchange rates. Retail sales were up 7.6% to 3.29 billion, with comp store sales rising 6.7% for the quarter. Total wholesale sales were up 30.5% to 1.71 billion, reflecting a 30.9% increase excluding effect of exchange rates.
Andrea Guerra, chief executive officer of Luxottica Group, commented: “2006 was another exceptional year for our Group, marking our third consecutive fiscal year of double-digit growth in sales. We currently expect that earnings per share for 2006 will be consistent with the range provided in our latest outlook.”
“Our results showed strong growth from both wholesale and retail operations. The record performance by our wholesale business – +30.5 percent year-over-year growth, to over euro 1.7 billion in sales — reflected significantly improved penetration in key markets worldwide thanks to the strength of our renewed brand portfolio. I am also pleased with the performance of our retail division, especially in North America, where the almost eight percent increase in sales was nearly all organic and affirmed — including during the final quarter of the year — the strength and additional potential of that business going forward.”
Wholesale sales to third parties for the year — a key measure of the business — rose by 28.1 percent. Ray-Ban, the world's most recognized eyewear brand, posted its fourth year in a row of double-digit growth, reaching a total of over 14 million units sold — an all-time record for the industry. Sales of luxury brands — including Bvlgari, Chanel, Dolce & Gabbana, Prada and Versace — rose by an average of 40 percent for the year. In terms of regions, the business continued to improve penetration in the key North American market. Of particular note was the performance of the Group's wholesale business in emerging markets, where sales rose for the year by 60 percent thus highlighting another area of growth going forward.
In 2006, the Group's investments in its store base further strengthened its retail operations, unlocking opportunities for growth going forward. The plan covered the remodeling of approximately 510 stores worldwide as well as the addition of approximately 570 new and acquired stores, including the beginning of retail operations in Mainland China.
“Turning to 2007,” added Mr. Guerra, “we are working on a highly focused plan that we expect should result in another strong year in both retail and wholesale. This plan will include additional investments in our store base for approximately euro 225 million to continue building on the significant momentum of our retail business.”
The Group's capital investment plan for 2007 currently includes the remodeling of an additional 480 stores worldwide as well over 500 new stores. Within retail, particularly in North America, the Group will especially focus on Sunglass Hut — for which by the end of 2007 approximately 60% percent of the store base is expected to be new or recently remodeled — and LensCrafters — where the roll-out of its new store format has already contributed to the positive results for 2006.
In wholesale Luxottica Group is expecting further growth from key luxury brands, which the Group believes continue to demonstrate significant potential for additional improvement, and from Ray-Ban. In terms of regions, emerging markets will be an area of additional focus for Luxottica Group with potential investments in both wholesale and retail.
