Despite weak financial results in Q3, Luxottica is confident on the full year outlook

Announcing its results for the third quarter of FY17, eyewear giant Luxottica said that its net sales increased 0.8 percent at constant exchange but declined 3.5 percent at current exchange rates as a result of the strong euro appreciation against the main currencies. In the first nine months of the year, revenues rose by 1.5 percent at constant exchange and 1.7 percent at current exchange rates.

“The unexpected events of September hurt sales for the period, impacting the results of our business in North America, Mexico and China. Nonetheless, and net of strong exchange rate volatility, we have closed a growing quarter,” said Leonardo Del Vecchio, Executive Chairman, and Massimo Vian, CEO for product and operations of Luxottica in a statement, adding, “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.”

The company added that quarterly sales performance showed dual speeds: growth acceleration in July and August compared to the first half of the year, followed by a drop in September due to extraordinary events that penalized the business mainly in North America. Globally, these events led to a closure of about 800 group stores and the total loss of over 4,000 retail days.

The wholesale division, which showed improvement compared to the second quarter, recorded flat sales or a decline of 0.3 percent at constant exchange rates due 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. The group’s comparable store sales were down 5.1 percent due to extraordinary events and the evolution of LensCrafters’ business model.

Luxottica’s Q3 net sales in Europe rise 16 percent

In the third quarter, net sales in Europe increased for the tenth consecutive quarter. Net sales were up 16 percent at constant exchange and 14.2 percent at current exchange rates. The company said, growth in the region was driven by Italy, Spain, France, the United Kingdom, Turkey and Eastern Europe.

The retail division benefited from the consolidation of the Salmoiraghi & Viganò stores in Italy and Sunglass Hut’s growth in continental Europe, with an positive start to the sun season in the region and the contribution of new stores.

Third quarter sales in North America recorded a 3.7 percent drop at constant exchange and 9 percent at current exchange rates due three devastating hurricanes that hit Texas, Florida and Puerto Rico, leading to a closure of about 570 group retail stores, most of them for over a week, and impacting thousands of wholesale customers. The wholesale business, up 0.5 percent at constant exchange but down 5.4 percent at current exchange rates, was driven by sales to the optical channel and department stores, which offset weakness in the sport channel. In the quarter, Luxottica added, Ray-Ban sales were up double-digit.

Asia-Pacific closed the third quarter with sales in line with the same period of the previous year, down 0.6 percent at constant exchange and 5.2 percent at current exchange rates due to the positive contribution of Australia, Japan and the travel retail business in the Asian region. The wholesale division is still impacted by the restructuring of distribution in Mainland China and the new commercial policies that are almost exclusively focused on direct sales to the final consumer. The retail business drove the growth in the region, with strong performance of the optical retail business and Ray-Ban stores in China, with over 60 new openings by the end of the year. The acceleration of OPSM sales in Australia was also a strong contributor.

Latin America helped to maintain the positive performance of the group, with sales up 7.9 percent at constant exchange and 6.7 percent at current exchange rates. Net sales in Brazil increased during the quarter due to improved macroeconomic environment and the consolidation in the group’s perimeter of Óticas Carol. Mexico continued to grow but slowed down its pace due to the September earthquake that has led to the temporary closure of a quarter of the group’s stores in the area. Within retail, Sunglass Hut continues to expand into the region with the opening of its first stores in Colombia and Argentina. GMO, the company said, after ten consecutive quarters of growth, was impacted by negotiations with trade unions that limited Chile’s network operations for a few days