The information on “Directly generated and distributed economic value” in the table below permits a different interpretation of the economic figures5 and outlines the overall economic value generated by the Group’s ordinary operations during the year and its breakdown in terms of the economic value distributed to its various stakeholders and the economic value retained within the organization.
|Economic value generated||8,947,233||9,202,374|
|Employee wages and benefits||2,651,486||2,701,229|
|Shareholders and providers of capital||553,246||547,441|
|Community investments (support for social, cultural and sports projects and partnerships with universities)||14,224||13,240|
|Economic value distributed||7,988,641||8,234,381|
|Economic value retained||958,593||967,992|
In 2018, the economic value generated, represented by net sales and financial income, came to Euro 8,947.2 million (-2.8% from 2017). Of these, Euro 7,988.6 million were distributed to the Group’s various internal and external stakeholders in the following ways:
- operating expenses towards suppliers of goods and services;
- employee wages and benefits;
- distribution of dividends to shareholders and interest payments on loans;
- income tax, distributed to the public authorities;
- support for social, cultural and sports projects and partnerships with universities in the reference communities.
The resources retained for the long-term development and growth of the Group came to Euro 958.6 million in 2018 (Euro 968 million in 2017) and are mainly represented by the items related to amortization expenses, the net income not distributed through dividends and the effect of deferred taxation.
ECONOMIC VALUE DISTRIBUTED: THE EXCLUSIVE RELATIONSHIP WITH THE COMMUNITIES
An analysis of the individual items that make up the economic value distributed makes it possible to quantify Luxottica’s contribution to the well-being of its employees, to the economic and social progress of the communities in which it operates and to the promotion of the territory.
The economic value distributed to suppliers went from Euro 4,627.9 million in 2017 to Euro 4,464,2 million in 2018 following the organizational streamlining initiatives that the Group pursued during the year to speed up decision making and the implementation of strategies, as well as to improve the efficiency and integration of the various business areas. These included:
- the simplification of the entire organization, with the centralization of key functions and activities at Group headquarters in Milan, such as e-commerce, management of assortments, visual merchandising and real estate activities involving the Group’s stores around the world;
- the strategy of internalizing some production processes in Italy, China and the United States;
- the gradual centralization of lens processing and finishing, moving from LensCrafters in-store labs and dedicated Oakley lens lab in Foothill Ranch to state-of-the-art central lens laboratories in Atlanta, Dallas and Columbus in the United States;
- the radical review of the distribution model in the Chinese market, increasingly oriented towards sales to the end consumer through the retail and e-commerce channels.
The economic value distributed by means of wages and benefits to its employees was equal to 33% of the economic value distributed (Euro 2,651.5 million) in 2018, in line with the previous year.
The economic value distributed to shareholders and providers of capital came to Euro 553.2 million, as compared with Euro 547.4 million in 2017, mainly due to the higher dividends distributed. The economic value distributed to the public authorities in the form of taxes came to Euro 305.5 million in 2018 from Euro 344.6 million in 2017, benefiting from the effects of the Italian Patent Box and from American tax reform.
In 2018 Luxottica, driven by a strong sense of responsibility and corporate citizenship, pursued its commitment towards the local communities and territories where it operates, supporting social, sport and cultural initiatives for a total of Euro 14.2 million (Euro 13.2 million in 2017).
The most significant initiatives are outlined below:
- the Luxottica welfare system, which since 2009 has involved not only employees but also their families and the community with initiatives ranging from educational support and healthcare to sustainable transport and a series of other services that meet people’s needs in an innovative and tangible way;
- initiatives designed to offer access to quality eyecare and eyewear for less developed communities in the world. Examples include the 131 Sustainable Vision Centers opened since 2013 in Africa, China, India, South-East Asia and the US by OneSight, an independent non-profit organization of which Luxottica is the founding sponsor, and, in 2018, the second edition of the two weeks of free eye exams at a number of important accommodation facilities in Milan in parallel with World Sight Day;
- initiatives to promote and protect cultural, social and environmental heritage that embodies “made in Italy”, the Group’s most distinctive value and evident in all “made in Luxottica” products and services. “Made in Italy” encompasses the same values of awareness and passion for aesthetics and culture that Luxottica undertakes to support through:
- the promotion of some of Italy’s finest landmarks, such as the Teatro alla Scala in Milan, which it has supported since 2016, and the Ponte dell’Accademia in Venice, whose restoration it financed;
- the organization, through the Alain Mikli brand, of initiatives that make art accessible to people with visual disabilities, such as the tactile exhibitions at the Quai Branly - Jacques Chirac museum in Paris (since 2010) and the creation of the audio descriptions of the plays performed at the Odéon theatre in Paris and the tactile models that faithfully reproduce the sets (since 2017)
- projects with universities in Italy and optometry schools in the US and Australia, including:
Bocconi University in Milan, which it has partnered with since 2014 to provide economic support to the most deserving students, for example by supporting three international study programs;
- the second edition in 2018 of the eyeFWD training initiative, five days of training at the Luxottica premises in Cincinnati dedicated to 30 select optometry students in North America;
- the opportunity for 34 American optometry students to accompany optometrists and Group volunteers to two eye clinics organized by OneSight in Mexico and the opportunity for 12 Australian optometry students to participate in OneSight regional indigenous clinics in remote parts of Australia;
- support for Valore D, the association of Italian businesses that Luxottica helped to create in 2009 to promote diversity, female talent and leadership;
- economic assistance for emergency situations, such as the supplementing of the salaries of all of the over 8,000 employees on the temporary lay-off scheme at the Agordo, Cencenighe, Sedico and Pederobba sites, forced to stay at home due to the closure of the plants following the bad weather that affected the area in late October;
- other initiatives aimed at local communities, from awareness campaigns on eyecare to collaboration with foundations active in developing countries:
Luxottica is one of the main supporters of “Think About Your Eyes”, an advertising campaign on the importance of getting a comprehensive eye exam, which launched in the US in 2010 together with The Vision Council, The American Optometric Association and other partners;
- support, through the Indian subsidiary, for the projects of Sightsavers, an international non-profit organization that seeks to prevent and eliminate blindness in developing countries, in rural areas of India;
- support, through Oakley, for Qhubeka, the foundation of South African cycling team Dimension Data, with the aim of giving as many bicycles as possible to adults and children that live in rural areas of South Africa.
5 The calculation method suggested by Disclosure 201-1 of the GRI Standards was used
6 2017 Net sales and operating expenses have been restated to reflect the application of the new accounting standard IFRS 15, as explained in the Notes to Luxottica’s 2018 consolidated financial statements