Luxottica expects another year of double-digit growth in 2007
Milan, Italy – March 6, 2007 - Luxottica Group S.p.A. (NYSE: LUX; MTA: LUX) , the global leader in the eyewear sector, expects that earnings per share (EPS) for fiscal year 2007 will improve year-over-year by as much as 18 percent at constant exchange rates.
Detailed forecast for fiscal year 2007(1)
For the full year, the Group forecasts a growth in consolidated sales at constant exchange rates of between eight and ten percent, which would reflect a growth in EPS for the year of between 16 percent and 18 percent. At an average exchange rate of €1 = US$1.30, this would result in consolidated sales for fiscal year 2007(2) of between €4.9 billion and €5.0 billion and EPS for the period of between €1.07 and €1.09 (earnings per ADS of between US$1.39 and US$1.42).
The Group also expects that its Net Debt position will improve further from its December 31, 2006, levels. Fiscal year 2007 is expected to be another year of strong cash flow generation.
Andrea Guerra, Luxottica Group’s chief executive officer, commented: “Today we are leaders in an industry that is very quickly evolving: over recent years eyewear has evolved into a key fashion and luxury accessory, in fact one through which all of us express their personality; two-thirds of the world’s population has only recently entered our market and are already showing significant appreciation for our brands; and the aging of the population, in particular of baby boomers, is another important driver of growth in our sector. We believe that 2007 will be another record year for our Group, thanks mainly to ongoing investments in our store base for approximately €225 million, including the remodeling of an additional 480 stores worldwide as well over 500 new stores.
Wholesale: another strong year in
In particular, the Group expects another strong year for its wholesale business with an anticipated improvement in sales of 15 percent year-over-year and an anticipated rise in profitability by another 100 bps over its current industry-wide record levels. The main drivers of this important growth are expected to be: the much stronger brand portfolio, which saw the launch of Polo Ralph Lauren at the beginning of the year and which continues to enjoy significant growth opportunities mainly from Burberry, Bvlgari, Chanel, Dolce & Gabbana, Persol, Prada, Ray-Ban and Versace; significantly more focused advertising and trade marketing support; and the additional highly profitable growth in emerging markets.
Retail: a significant opportunity in sun, more steady growth from optical
In 2007, the Group plans to further extend its sun retail brand Sunglass Hut to profit from growth in demand for fashion and luxury sun wear. Growth in sun is expected to come from: traditional markets – mainly in the U.S., but also in Asia-Pacific and Europe, where the Sunglass Hut business has recently returned to profitability after a successful restructuring; new markets – from the Middle East and Hong Kong to Macao and South Africa; and new channels – especially department stores and travel retail.
In optical, Luxottica expects more steady growth and to continue to enjoy the benefits of ongoing investments in its store base both in North America and Asia-Pacific, the renewed strength of its brand portfolio and its focus on higher value-added products, including the ongoing roll-out of new lens technologies. In terms of profitability, Luxottica expects 2007 to produce more of the benefits of the Group’s ongoing focus on improving overall operating efficiency.
Investor presentation today in Milan, available via webcast
Today at 2:30 PM CET (1:30 PM GMT, 8:30 AM US ET) the Group will hold an investor presentation at the Milan Stock Exchange. The presentation, which will be open to representatives of the financial community and the media, and all related materials, will be available via webcast from the Group’s corporate website at www.luxottica.com. During the presentation, Group management is expected to outline key drivers of growth and initiatives for fiscal year 2007.
About Luxottica Group S.p.A.
Luxottica Group is a global leader in eyewear, with approximately 5,700 optical and sun retail stores in North America, Asia-Pacific, China and Europe and a strong brand portfolio that includes Ray-Ban, the best selling sun and prescription eyewear brand in the world, as well as, among others, license brands Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada and Versace, and key house brands Vogue, Persol, Arnette and REVO. In addition to a global wholesale network that touches 130 countries, the Group manages leading retail brands such as LensCrafters and Pearle Vision in North America, OPSM and Laubman & Pank in Asia-Pacific, and Sunglass Hut globally. The Group’s products are designed and manufactured in six Italy-based high-quality manufacturing plants and in the only two China-based plants wholly-owned by a premium eyewear manufacturer. For fiscal year 2006, Luxottica Group (NYSE: LUX; MTA: LUX) posted consolidated net sales of €4.7 billion. Additional information on the Group is available at www.luxottica.com.
Safe Harbor Statement
Certain statements in this press release may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those which are anticipated. Such risks and uncertainties include, but are not limited to, fluctuations in exchange rates, economic and weather factors affecting consumer spending, the ability to successfully introduce and market new products, the availability of correction alternatives to prescription eyeglasses, the ability to successfully launch initiatives to increase sales and reduce costs, the ability to effectively integrate recently acquired businesses, as well as other political, economic and technological factors and other risks referred to in Luxottica Group’s filings with the U.S. Securities and Exchange Commission. These forward-looking statements are made as of the date hereof and, under U.S. securities regulation, Luxottica Group does not assume any obligation to update them.
Luxottica Group S.p.A. media and investor relations contacts
Luca Biondolillo, Head of Communications
Tel.: +39 (02) 8633 4062
Alessandra Senici, Senior Manager, Investor Relations
Tel.: +39 (02) 8633 4069
1 Earnings per share guidance does not reflect the impact of adoption of Financial Accounting Standard Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, of FASB Statement 109 (FIN 48).
2 Luxottica Group’s forecast for fiscal year 2007 includes the expected impact of non-cash expenses for stock options, in line with the adoption of SFAS 123 (R) as of January 1, 2006.