Luxottica Group Net Sales for First Quarter 2005 Up Year-Over-Year by 34.8 percent
Milan, Italy – April 28, 2005 - Luxottica Group S.p.A. (NYSE: LUX; MTA: LUX), global leader in the eyewear sector, today announced consolidated U.S. GAAP results for the three-month period ended March 31, 2005.
Consolidated financial highlights
First Quarter 20051
- Sales: €1,037.0 million (+34.8%, +39.7% assuming constant exchange rates2)
- Retail sales: €756.8 million (+47.4%); Retail comparable store sales3: +3.6%
- Total wholesale sales: €326.9 million (+9.4%)
- Operating income: €136.4 million (+13.6%); Operating margin: 13.2%
- Retail operating income: €76.5 million (+19.5%); Retail operating margin: 10.1%
- Wholesale operating income: €77.7 million (+14.3%); Wholesale operating margin: 23.8%
- Net income: €76.3 million (+7.3%); Net margin: 7.4%
- Earnings per share: €0.17 (US$0.22 per ADS)
Andrea Guerra, chief executive officer of Luxottica Group, commented: “We are particularly pleased with our results for the first quarter. Both the retail and wholesale divisions performed quite well. In particular, the strong results of the retail division confirm that the Cole National integration continues to make progress and is on track, reflecting its importance to the growth of our overall business.”
Within retail, our optical and sun brands continued to perform better than the market, especially in terms of profitability, which improved at all our chains. In North America, profitability continued to rise notwithstanding the significant resources dedicated to the integration of the recently acquired Cole National business and its historically significantly lower profitability. In Asia Pacific, our retail business showed a further improvement in profitability, while our overall business is picking up momentum after OPSM Group became a wholly-owned subsidiary of Luxottica Group.
In the quarter, wholesale sales to third parties rose by 9.6% (by 10.6% assuming constant exchange rates), while operating margin for the entire wholesale division reached 23.8%, up 100 bps year-over-year despite the nearly five percent devaluation of the U.S. Dollar against the Euro for the quarter. These results reflect the strengthening of our brand portfolio and improved penetration in several markets.
Key house brands continued to perform strongly - Ray-Ban and Vogue above all - showing potential for additional growth in new markets. The Donna Karan eyewear collections, originally launched in January of this year, were well received by the market, although our results benefited only partially from their impact.
Cash flow generation for the quarter was positive. As of March 31, 2005, consolidated net outstanding debt was €1,657.2 million, compared with €1,716.0 million as of December 31, 2004, reflecting a net improvement of €58.8 million. Assuming constant exchange rates, consolidated net outstanding debt would have improved by €91 million.
For the quarter, the tax rate rose, as expected, to 38.0 percent, from 35.0 percent for the first quarter of 2004.
Luxottica Group consolidated results for the quarter include the consolidation of the Cole National business.
Forecast for fiscal year 2005
Luxottica Group, based on a €1 = US$1.30 average exchange rate for the full year and an expected tax rate of between 37 percent and 40 percent, confirms the previously announced forecast for fiscal year 2005: • Sales: between €4,000 million and €4,150 million • Earnings per share: between €0.68 and €0.70 (earnings per ADS between US$0.88 and US$0.91) Luxottica Group’s consolidated results for the first quarter of 2005 were approved today by its Board of Directors.
About Luxottica Group S.p.A.
Luxottica Group is the world leader in the design, manufacture, marketing and distribution of prescription frames and sunglasses in mid- and premium-priced categories. The Group’s products are designed and manufactured in its six facilities in Italy and one in the People’s Republic of China.
The lines manufactured by Luxottica Group include over 2,450 styles in a wide array of colors and sizes and are sold through 21 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, Australia and Poland; one 75%-owned subsidiary in Israel; a 70%-owned subsidiary in Greece; three 51%-owned subsidiaries in the Netherlands, Turkey and Singapore; one 49%-owned subsidiary in the United Arab Emirates; and one 44%-owned subsidiary in India.
In October 2004, Luxottica Group acquired Cole National Corporation, one of the largest U.S. optical retailers, operating more than 2,100 retail locations through Pearle Vision, Sears Optical, Target Optical and BJ’s Optical, and a leading provider of managed vision care services through Cole National Managed Vision. Prior to that, in September 2003, the Group acquired control of OPSM Group, the leading eyewear retailer in Australia, and, in March 2001, Sunglass Hut International, a leading sunglass retailer with approximately 1,900 stores worldwide.
This followed the acquisitions of the Bausch & Lomb sunglass business, which includes the prestigious Ray-Ban®, Revo®, ArnetteTM and Killer Loop® brands, in June 1999, and LensCrafters, the largest optical retail chain in North America, in May 1995. For fiscal year 2004, Luxottica Group posted net sales and net income of €3,223.9 million and €286.9 million, respectively. Additional information on the company is available on the web 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 ability to successfully launch initiatives to increase sales and reduce costs, the availability of correction alternatives to prescription eyeglasses, the ability to effectively integrate recently acquired businesses, including Cole National, risks that expected synergies from the acquisition of Cole National will not be realized as planned and that the combination of Luxottica Group’s managed vision care business with Cole National will not be as successful as planned, 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 Luxottica Group does not assume any obligation to update them.
Luxottica Group S.p.A.
Luca Biondolillo, Head of Communications Email: LucaBiondolillo@Luxottica.com
Alessandra Senici, Manager, Investor Relations Email : AlessandraSenici@Luxottica.com