Luxottica confirms 2016 sales goal after soft first quarter

By

Monica Karski

Published
May 2, 2016

Ray-Ban maker Luxottica confirmed its revenue goal for 2016 after sales growth eased at the start of the year, hit by a drop in tourist numbers and weaker emerging markets currencies.

The Italian company reported on Friday net sales of 2.3 billion euros ($2.6 billion) for the three months through March, up 0.6 percent in adjusted terms from a year earlier and in line with analysts' average forecast in a Reuters poll.

The adjusted growth rate, which excludes the impact of an accounting change at its EyeMed unit, was 9 percent in the last quarter of 2015.

Sales in January-March rose 1.8 percent excluding currency moves and Chairman Leonardo Del Vecchio confirmed the group's 2016 goal of a 5-6 percent sales growth at constant currencies.

Chief Executive Massimo Vian said a more volatile economic situation was pushing consumers in the group's top North American market as well as in China to delay purchases of sunglasses, while they continued to buy reading glasses.

Luxottica's sales in Asia Pacific, which accounts for 13 percent of the total, shrank in the first quarter hurt by weakness in Hong Kong.

Vian said Luxottica would shift focus at its 80 shops in Hong Kong to sell more spectacles to locals rather than sunglasses to tourists.

"What everyone thought was a temporary situation in Hong Kong is becoming entrenched," Vian said in a phone interview. "The attractiveness of Hong Kong as a tourist destination has decreased ... we will serve the local market."

Sales of sunglasses stagnated in North America where a stronger dollar deterred tourists. However Luxottica's revenues in the region grew thanks to its optical retail network.

Sales also rose in Europe despite fewer tourists traveling to London and Paris.
Luxottica said the comparison with the first quarter of 2015 was particularly tough due to a calendar effect that would be offset in coming quarters. Sales in the same period last year had also been boosted by the launch of Michael Kors' branded eyewear.

The group, which has lost three CEOs in 17 months and is now headed by 80-year-old Del Vecchio as executive chairman, on Friday appointed Francesco Milleri as deputy chairman.

A consultant of the company and a close aide of Del Vecchio, Milleri joined the board in March with the task of supporting the chairman.

$1 = 0.8734 euros