MILAN, Italy–(BUSINESS WIRE)–Oct. 26, 2001–Luxottica Group S.p.A. (NYSE:LUX; MTA:LUX)–
Group Highlights for the nine-month period:
– Net sales up by 27.4 percent to Euro 2,340.7 million (US$
– Operating income up by 27.1 percent to Euro 407.5 million
– Earnings per ADS to Euro 0.57 (US$0.51)
Luxottica Group S.p.A. (NYSE:LUX; MTA:LUX), worldwide leader in the eyewear sector, today announced record results for the three- and nine-month periods ended September 30, 2001.
Results of the Sunglass Hut operations were consolidated into the Group’s results for the three- and nine-month periods as of April 1, 2001.
The Company’s results are stated herein in accordance with U.S. GAAP and are broken out for additional perspective into consolidated, manufacturing/wholesale, including Ray-Ban and retail components, which include Sunglass Hut and LensCrafters. As there are intercompany items, it is important to note the full reconciliation detailed in the Segmental Information Table provided with this announcement.
Luxottica considers the financial results denominated in Euro, the Group’s reporting currency, to be a more accurate gauge of its operating performance. The results denominated in U.S. dollars were converted at the average exchange rate for the three-month period ended September 30, 2001, of Euro 1.00 = US$0.8895, compared with Euro 1.00 = US$0.9041 for the third quarter of 2000. For the nine-month period, the results denominated in U.S. dollars were converted at the average exchange rate of Euro 1.00 = US$0.8956, compared with Euro$1.00 = US$0.9400 for the equivalent period of 2000.
— Third quarter
Consolidated net sales for the third quarter rose by 32.6 percent to Euro 770.2 million, from Euro 580.6 million for the same period of 2000.
Consolidated gross profit for the quarter rose by 33.5 percent to Euro 561.9 million, from Euro 420.8 million for the equivalent period last year. Gross margin for the quarter was 73.0 percent, compared with 72.5 percent for the third quarter of last year. Consolidated operating income for the third quarter rose by 24.0 percent to Euro 118.4 million, from Euro 95.5 million for the equivalent quarter of 2000. Operating margin for the quarter was 15.4 percent.
Consolidated net income for the quarter rose by 17.9 percent to Euro 69.0 million, from Euro 58.5 million for the third quarter last year. Consequently, consolidated net margin for the quarter was 9.0 percent.
Earnings per American Depositary Share (ADS) (one ADS represents one ordinary share) for the third quarter were Euro 0.15, compared with Euro 0.13 for the same period last year. In U.S. dollars, earnings per ADS (EPADS) for the quarter were US$0.14, compared with EPADS of US$0.12 for the same period last year.
— Nine-month period
Consolidated net sales for the nine-month period of 2001 rose by 27.4 percent to Euro 2,340.7 million, from Euro 1,837.6 million for the equivalent period last year.
Consolidated gross profit for the period rose by 27.0 percent to Euro 1,671.8 million, from Euro 1,316.0 million for the nine-month period of last year. Gross margin for the period was 71.4 percent.
Consolidated operating income for the nine-month period rose by 27.1 percent to Euro 407.5 million, from Euro 320.6 million for the equivalent period of 2000. Operating margin for the period was 17.4 percent.
Consolidated net income for the nine-month period rose by 25.4 percent to Euro 255.6 million, from Euro 203.8 million for the equivalent period last year. Consequently, consolidated net margin for the period was to 10.9 percent.
EPADS for the nine-month period ended September 30, 2001, were Euro 0.57, compared with Euro 0.45 for the same period last year. In U.S. dollars, EPADS for the period were US$0.51, compared with EPADS of US$0.43 for the nine-month period of last year.
Net outstanding debt on September 30, 2001, increased by Euro 545.0 million to Euro 1,453.2 million, compared with net outstanding debt of Euro 908.2 million on December 31, 2000. This increase was mainly in connection with the acquisition of Sunglass Hut that closed in April of this year.
Breakdown of Manufacturing/ Wholesale and Retail Results:
— Manufacturing/Wholesale Division
Luxottica’s manufacturing/wholesale sales for the nine-month period rose by 7.4 percent to Euro 889.7 million, from Euro 828.2 million for the same period last year. Manufacturing/wholesale sales for the nine-month period rose year-over-year by 7.0 percent, assuming unchanged exchange rates.
Manufacturing/ wholesale operating income for the nine-month period rose by 16.0 percent to Euro 227.3 million, from Euro 196.0 million for the same period in 2000. Manufacturing/ wholesale operating margin for the period improved to 25.5 percent, from 23.7 percent for the nine-month period of last year.
— Retail Division
Group’s retail results for the three- and nine-month periods ended September 30, 2001, included results for both LensCrafters and Sunglass Hut, as they are effectively run as a single division of the Group. Results of the Sunglass Hut operations were consolidated into the Group’s results for the three- and nine-month periods as of April 1, 2001.
Retail sales for the third quarter rose by 52.9 percent to US$519.9 million, from US$340.1 million for the equivalent quarter last year. Same store sales for the quarter rose year-over-year by 1.6 percent.
Retail sales for the nine-month period of 2001 rose by 38.7 percent to US$1,421.2 million, from US$ 1,024.6 million for the same period last year.
Retail operating income for the nine-month period improved by 52.3 percent to US$228.8 million, from US$150.2 million for the equivalent period last year. As a percentage of retail sales, retail operating income for the period was 16.1 percent, up from 14.7 percent for the nine-month period of last year.
Commenting on the results of the retail division, Leonardo del Vecchio, chairman and founder of Luxottica Group, said: “The strong quarterly performance of our retail division, particularly in terms of profitability, was directly the result of the integration of the Sunglass Hut stores into our Group. In fact, during the quarter we finalized the closing of the former Sunglass Hut headquarters in Miami and integrated the relative central functions into a single organization in Cincinnati, where LensCrafters was already headquartered. This produced savings and synergies for both organizations.”
“Regarding sales at Sunglass Hut, today I am no longer as concerned as I was immediately following the tragic events of September 11 in New York and Washington. In fact, even sales at the 84 stores that we operate in airports worldwide have already regained the greater part of the 34 percent drop experienced in the first full week immediately following September 11, and are currently showing a decline in the high single digits.”
“Finally, I am pleased with the improvement in profitability for the quarter of the Sunglass Hut stores. This was the result of renegotiations of terms with suppliers as well as the replacement of the low-margin Oakley products with a broader product offering that better reflects the assortment available to the public of our house brand and designer lines.”
Statement from the Chairman:
Mr. del Vecchio concluded: “I am pleased with the results posted by the Group for the third quarter. Despite the already unfavorable economic environment of the first eight months of the year, which was worsened by the events of September 11, we were still able to reach our profitability goals. We consider this further evidence of the validity of the strategy of our Group, which allows us to better meet the challenges of the economic environment thanks to our diversification and penetration in the markets.”
“Today, we are past the impact from the events of September 11, which could
have hit our sector even more severely, especially because it added to an already weak economic environment. Therefore, barring any further worsening of the political situation worldwide, the effect of which could not be fully anticipated today, our objectives remain to post consolidated sales for the full year in excess of Euro 3 billion, with a net margin of approximately ten percent.”
The Group announced the acquisition from its Japanese partner Charmant of the 50 percent participation in the joint-venture Tristar that it did not already own. Tristar produces frames in China, and is now wholly-owned by Luxottica.
Additionally, the Group opened a new 75%-owned subsidiary in Poland, as part of a strategy to strengthen its distribution network.
Luxottica is the world leader in the design, manufacture, marketing and distribution of high quality eyeglass frames in mid- and premium-priced categories. The Group’s products, which are designed and manufactured in six facilities in Italy and include over 2,100 styles in a wide array of colors and sizes, are sold through 20 wholly-owned subsidiaries in the United States, Canada, Italy, France, Spain, Portugal, Sweden, Germany, the United Kingdom, Brazil, Switzerland, Mexico, Belgium, Argentina, South Africa, Finland, Austria, Norway, Japan, Hong Kong ; three 75%-owned companies in Australia, Israel and Poland, a 70%-owned company in Greece; three 51%-owned subsidiaries in the Netherlands, Turkey and Singapore and a 49%-owned subsidiary in the Arab Emirates. In April of 2001, Luxottica acquired Sunglass Hut International, a leading sunglass retailer with over 1900 stores worldwide. This followed the acquisitions of Bausch & Lomb sunglass business, which includes the prestigious Ray-Ban(R), Revo(R), Arnette(TM) and Killer Loop(R) brands, in June 1999 and LensCrafters, the largest optical retail chain in North America, in May 1995. As of September 30, 2001, LensCrafters operated 861 stores throughout the United States and Canada. For fiscal 2000, Group net sales improved year-over-year by 29 percent to Euro 2,416.8 million and net income by 67.4 percent to Euro 255.3 million.