EssilorLuxottica: Third-Quarter 2019 Revenue - Momentum Continues
to Build
Third-Quarter 2019
RevenueMomentum Continues to Build
- Third-quarter revenue growth of 8.4%1 (+5.2% at
constant exchange rates2)
- Lenses & Optical Instruments, Retail and e-commerce
drove the acceleration
- Improved momentum in the USA, Europe and Mainland
China
- Sales in fast-growing markets4 up around 10% at
constant exchange rates2
Charenton-le-Pont, France (October 30,
2019 – 7:00am) – EssilorLuxottica today announced that
consolidated revenue for the first nine months of 2019 amounted to
Euro 13,086 million, representing a year-on-year increase of 7.7%
compared to the 2018 first nine months pro forma1 revenue (+4.3% at
constant exchange rates2).
“The continuous improvement in our performance
validates our growth strategy as well as our investments in product
innovation, digitalization, fast-growing markets and talent. This
acceleration further demonstrates our ability to execute the
business plan and deliver sales and cost synergies”, said Francesco
Milleri and Laurent Vacherot[*]. “On this basis we will
confirm our efforts to transform the industry and eliminate poor
vision throughout the world.”
Nine-month 2019 revenue by operating
segment
In millions of Euros |
9M 2019 |
9M 2018 pro forma1 |
Change at constant rates2 |
Currency effect |
Change (reported) |
Lenses &
Optical Instruments |
5,090 |
4,694 |
+5.6% |
+2.8% |
+8.4% |
Sunglasses &
Readers |
643 |
572 |
+8.5% |
+3.9% |
+12.4% |
Equipment |
151 |
137 |
+6.6% |
+4.0% |
+10.7% |
Essilor revenue |
5,885 |
5,403 |
+5.9% |
+3.0% |
+8.9% |
Wholesale |
2,508 |
2,420 |
+1.6% |
+2.0% |
+3.6% |
Retail |
4,694 |
4,330 |
+3.8% |
+4.6% |
+8.4% |
Luxottica revenue |
7,201 |
6,750 |
+3.0% |
+3.6% |
+6.7% |
Total
revenue |
13,086 |
12,154 |
+4.3% |
+3.3% |
+7.7% |
Nine-month 2019 revenue by
region
In millions of Euros |
9M 2019 |
9M 2018 pro forma1 |
Change at constant rates2 |
Currency effect |
Change (reported) |
North
America |
6,881 |
6,320 |
+2.7% |
+6.2% |
+8.9% |
Europe |
3,265 |
3,120 |
+5.1% |
-0.5% |
+4.7% |
Asia, Oceania and
Africa |
2,137 |
1,987 |
+5.6% |
+2.0% |
+7.5% |
Latin
America |
803 |
727 |
+11.8% |
-1.3% |
+10.6% |
Total |
13,086 |
12,154 |
+4.3% |
+3.3% |
+7.7% |
In the first nine months of the year, revenue
grew by 7.7% compared to prior-year pro forma1 revenue (+4.3% at
constant exchange rates2).Essilor led this performance with sales
growth of 8.9% on a reported basis and of 5.9% at constant exchange
rates2.Luxottica recorded 6.7% growth in revenue (+3.0% at constant
exchange rates2), posting the same level of performance for the
third-quarter and nine-month period, on the back of positive trends
in both the Wholesale and Retail divisions.Fast-growing markets4,
which represented close to 20% of consolidated sales, led the
growth of the Company, with a sales increase around 10% at constant
exchange rates2. The direct online channel, which represented
around 5% of consolidated sales, was also a meaningful contributor,
with sales growth of around 15% at constant exchange rates2, led by
double-digit growth on Ray-Ban.com, Oakley.com, SunglassHut.com and
in Essilor’s prescription eyeglasses offers.
Third-quarter 2019 revenue by operating
segment
In millions of Euros |
3Q 2019 |
3Q 2018 pro forma1 |
Change at constant rates2 |
Currency effect |
Change (reported) |
Lenses &
Optical Instruments |
1,713 |
1,559 |
+7.0% |
+2.9% |
+9.9% |
Sunglasses &
Readers |
187 |
165 |
+8.9% |
+4.7% |
+13.6% |
Equipment |
53 |
43 |
+18.1% |
+3.2% |
+21.2% |
Essilor revenue |
1,953 |
1,767 |
+7.5% |
+3.1% |
+10.5% |
Wholesale |
749 |
718 |
+1.6% |
+2.8% |
+4.4% |
Retail |
1,608 |
1,492 |
+4.2% |
+3.5% |
+7.8% |
Luxottica revenue |
2,357 |
2,209 |
+3.4% |
+3.3% |
+6.7% |
Total
revenue |
4,310 |
3,977 |
+5.2% |
+3.2% |
+8.4% |
Total consolidated sales amounted to Euro 4,310
million in the third quarter, up 5.2% at constant exchange rates2,
above the annual objective of 3.5% to 5.0%. The acceleration versus
the first and the second quarter (3.7% and 4.1%, respectively) was
primarily driven by the Lenses & Optical Instruments and Retail
divisions.
Lenses & Optical
Instruments sales were up 9.9% to Euro 1,713 million
(+7.0% at constant exchange rates2), of which 6.2% in
like-for-like3 terms. This performance was driven by new products,
online sales and fast-growing markets4. The successful launch of
Transitions® Signature® GEN 8TM in the United States supported the
improved growth rate. The Instruments department also contributed
to the division’s performance thanks to the new Visioffice®X, a
measuring tool for ECPs that customizes patient lenses, as well as
the Vision-RTM 800 that allows faster and more precise refraction
in increments of one-hundredth of a diopter. E-commerce continued
its double-digit growth, driven by prescription offers and contact
lenses.
The Sunglasses & Readers
division posted revenue of Euro 187 million, up 13.6% (+8.9% at
constant exchange rates2), of which 8.8% in like-for-like3 terms.
In China, Xiamen Yarui Optical (Bolon™) saw robust growth during
the quarter, fueled mainly by optical frames, which now account for
more than 40% of the brand’s sales, and further gains outside the
Chinese market. In the United States, sales to consumers were
robust throughout the summer, contributing to good results at FGX
International and Costa. E-commerce sales in China and the United
States remained strong.
Equipment sales rose by 21.2%
to Euro 53 million (+18.1% at constant exchange rates2), of which
19.6% in like-for-like3 terms, after a number of orders expected in
the first half were delivered in the third quarter. This growth was
driven by healthy gains in Asia and Latin America, while business
slowed in North America. Sales of new generation surfacing machines
remained buoyant while demand for coating machines ticked up. The
backlog ended the quarter at a more moderate level.
Wholesale sales were up by 4.4%
to Euro 749 million in the third quarter (+1.6% at constant
exchange rates2), fueled by all regions with the exception of
Asia-Pacific. North America performed well across independents,
department stores and third-party e-commerce channels. Europe was
driven by most key markets as well as the STARS expansion in the
region. Latin America was led by a continuously sound business in
Brazil. Asian wholesale was held back by a generally lower Chinese
travel flow in the region, the political turmoil in Hong Kong and
unseasonal weather in Japan.
Retail sales grew 7.8% to Euro
1,608 million (+4.2% at constant exchange rates2), with comparable
store sales5 up 1% in the third quarter. Sales accelerated thanks
to North America, with Sunglass Hut turning positive, Target
Optical still delivering double-digit growth and the insurance
business performing strongly. Results confirmed the solid business
in Australia and New Zealand, Europe (led by Salmoiraghi &
Viganò and Sunglass Hut), Brazil (with Sunglass Hut) and at GMO.
Luxottica’s e-commerce platforms registered their strongest
quarterly growth since the end of 2016, fueled by double-digit
growing Ray-Ban.com, Oakley.com and SunglassHut.com.
Third-quarter 2019 revenue by
geographical area
In millions of Euros |
3Q 2019 |
3Q 2018 pro forma1 |
Change at constant rates2 |
Currency effect |
Change (reported) |
North
America |
2,298 |
2,110 |
+4.2% |
+4.7% |
+8.9% |
Europe |
1,034 |
969 |
+6.0% |
+0.7% |
+6.7% |
Asia, Oceania and
Africa |
701 |
651 |
+5.1% |
+2.7% |
+7.8% |
Latin
America |
277 |
247 |
+10.9% |
+1.3% |
+12.1% |
Total |
4,310 |
3,977 |
+5.2% |
+3.2% |
+8.4% |
In North America revenue grew
by 8.9% to Euro 2,298 million in the third quarter. This represents
an increase of 4.2% at constant exchange rates2, a sharp
acceleration versus the first half of the year (+1.9%).
Essilor sales benefited from the launch of
Transitions® Signature® GEN 8TM , which yielded a step change in
growth for Transitions® lenses, notably with Independent Eyecare
Professionals as well as through the company’s retail channels.
Growth with Alliance members and Essilor Experts continued at a
solid pace with a more mixed picture in key accounts. Equipment and
Sunglasses & Readers contributed to growth during the quarter
while performance in Canada weighed slightly on regional
performance. E-commerce sales were particularly strong during the
quarter, with a noteworthy performance from EyeBuyDirect.
At Luxottica, both the Wholesale and Retail
divisions had their best quarter in the year thus far. Wholesale
accelerated, with the independent channel remaining strong and
business advancing with department stores and third-party
e-commerce platforms. Retail sales rebounded in the third quarter
after a slight deceleration in the previous one. Contributing to
this were Sunglass Hut, which turned positive in comparable stores
sales5 thanks to solid retail execution and continuous investments
in the digitalization of the stores, Target Optical and EyeMed,
which continued to outperform, advancing at a double-digit pace.
LensCrafters’ comparable store sales5 were still slightly negative,
although improving during the quarter thanks to a solid
back-to-school season. The performance at Sears continued to dampen
the overall performance of the division (on a halved store count
year-on-year). Direct e-commerce also confirmed its strong trend at
26% sales growth2 in the third quarter, with Ray-Ban.com and
SunglassHut.com leading the way. Oakley.com showed a notable
acceleration, also driven by the launch of the Oakley NFL
partnership, which showed promising early results.
In Europe revenue increased by
6.7% to Euro 1,034 million (+6.0% at constant exchange rates2).
Essilor businesses continued to deliver growth.
Within the Lenses & Optical Instruments division, growth was
once again solid for Instruments thanks to new products, the
Vision-R™ 800 phoropter and Visioffice®X, a new in-store lens
personalization solution. As for lenses, good market conditions
continued to drive growth in France, where a strong multi-network
strategy yielded results, as well as in Poland, the Baltic
countries, Eastern Europe, Russia and Turkey. Business was softer
in the United Kingdom and the Nordic countries. On the other hand,
sales rebounded for Sunglasses & Readers, notably in the United
Kingdom and Germany, and e-commerce sales showed double-digit
growth driven by Vision Direct.
Luxottica’s business in Europe continued to
grow. The quarterly performance in Wholesale mirrored the trends
seen in the first half of the year, with most of the countries and
in particular Italy, the Netherlands, Austria and Northern Europe,
contributing to the growth. The company continued to develop its
STARS program, with an increase in doors of approximately 50% since
the beginning of the year. The program today represents over 25% of
Wholesale revenues in the region, showing a strong acceleration in
the third quarter, up by more than 30% compared to the third
quarter of last year. Retail sales grew steadily in the quarter in
high-single digits, driven by Sunglass Hut which experienced
positive comparable store sales5 and benefited from new space and
effective in-store execution. All major countries showed positive
growth in Retail, led by Sunglass Hut in Continental Europe and
Salmoiraghi & Viganò in Italy.
In Asia, Oceania and Africa
revenue was up 7.8% to Euro 701 million (+5.1% at constant exchange
rates2).
Essilor businesses delivered more improved
growth in the region compared to the first half, despite an
elevated comparison base. The Lenses & Optical Instruments
division saw its growth accelerate further in Mainland China,
thanks to strong demand for Varilux®, Crizal®, EyezenTM and Nikon®
lenses, for myopia control solutions and mid-tier offerings. In
India, a sharp rise in sales to independent opticians and
optometrists was attributable to the popularity of Crizal® lenses,
promotional campaigns, and efforts to raise awareness about the
importance of vision correction. This division also saw strong
gains in Southeast Asia and South Korea, fueled by the Varilux®
brand and entry-level progressive lenses. Branded lenses and thin
lenses drove sales up sharply in Japan. The Sunglasses &
Readers division also made a solid contribution to growth in the
region with BolonTM and Molsion™ posting continued gains in optical
frames and online sales.
The overall growth in the region for Luxottica
decelerated during the third quarter mainly due to lower Chinese
travelling flows, the ongoing political turmoil in Hong Kong and
the unfavorable weather conditions in Japan. The performances were
mixed between the two channels and the different countries. The
Retail business continued its growth trajectory thanks to Australia
and New Zealand, which posted positive sales and comparable stores
sales5, with the optical business positive for the 13th quarter in
a row. Despite Japan’s unusually long and cool rainy season, sales
remain positive year-to-date. Instead Wholesale China continued to
realize the benefits of a rebuilt division, reporting double-digit
growth, but still on a relatively small baseline.
In Latin America,
EssilorLuxottica reported revenue up 12.1% to Euro 277 million
(+10.9% at constant exchange rates2).
Essilor businesses posted double-digit growth in
both Brazil and Spanish speaking markets through continued market
development efforts, new partnerships and product mix. In Brazil, a
robust second quarter dynamic continued through most of the third
quarter ahead of a shift in focus to the upcoming Transitions®
Signature® GEN 8TM launch. In Colombia, sales of Transitions®
lenses remained buoyant with a particularly strong attachment rate
for Varilux® lenses. Recently formed partnerships in Mexico
supported double-digit growth at constant exchange rates2. The
region continued to benefit from rapid e-commerce growth.
At Luxottica, both Wholesale and Retail
divisions contributed to the solid growth of the region, led by a
strong Brazil which confirmed the double-digit growth trend
year-to-date. The Wholesale performance was fueled by the continued
expansion of the Óticas Carol franchise network and subsequent
STARS on-boarding: the retail brand added 100 new franchise doors
since the beginning of the year. Retail continued to see positive
momentum at Sunglass Hut Brazil, while GMO accelerated its
favorable growth trend during the third quarter.
Eliminating poor vision around the
worldLast September, EssilorLuxottica made Fortune
magazine’s 2019 Change the World list, taking the 17th spot out of
52 in this prestigious ranking which recognizes companies that have
had a positive social impact through their core business strategy.
The Company was distinguished in particular for its commitment to
bring good vision to everyone everywhere as part of its mission to
help people “see more, be more and live life to its
fullest”.Alongside the United Nations General Assembly last
September, Essilor published a new report called “Eliminating Poor
Vision in a Generation: What will it take to eliminate uncorrected
refractive errors by 2050?”. The report defines the scale of
uncorrected poor vision globally and outlines solutions to
eliminate the world’s largest unaddressed disability within one
generation: a total investment of USD14 billion over the next 30
years would achieve this goal by 2050. To further this mission
during the third quarter, Essilor launched the Ready2Clip
Generation II product globally. In China, the company announced a
collaboration with the Huoqiu County and the Huoqiu Boai Hospital
to eliminate poor vision from the county in three years. With a
population of over 1.6 million, Huoqiu is the first Chinese county
Essilor has partnered with to eliminate poor vision. Furthermore,
in Bangladesh, the Eye Mitra program crossed the mark of 100
micro-entrepreneurs to bridge the access gap to vision care. The
total number of wearers created through such initiatives over the
first nine months of the year is over 6 million.In the nine-month
period, Luxottica, through its support for OneSight, an independent
non-profit organization of which the company is the founding
sponsor, served close to 83,000 patients providing eye exams and
glasses across 20 charitable clinics located in the USA, Jordan,
Puerto Rico, Chile, Mexico, Mongolia, Peru, Cambodia, China,
Brazil, Colombia, Tanzania and Thailand. OneSight also opened 47
brand new Sustainable Vision Centers in 5 countries (the USA,
Rwanda, Zambia, China, Bangladesh). Each clinic is staffed with
Luxottica employees and doctors and over 703 Luxottica employees
had an opportunity to volunteer in the first nine months of 2019.
Additionally, OneSight partnered with the Essilor Vision Foundation
to invite 50 Essilor volunteers to join forces with Luxottica
employees at 16 vision clinics in Cambodia, India, Indonesia,
Chile, Peru, the United States, Colombia, Mongolia, Thailand, Nepal
and Tanzania.
Synergies and integration
During the first nine months of the year, the Company put in place
a structured process to drive integration and deliver synergies.
The net impact on adjusted6 operating profit of those synergies is
expected to be in the range of:
- Euro 300 to Euro 350 million in the period
2019/2021
- Euro 420 to Euro 600 million by
2022/2023
With the ultimate objective of building a
unified company, EssilorLuxottica has launched more than 20
priority work streams and 160 business initiatives that are being
implemented globally. This activity is under the leadership of more
than 40 Essilor and Luxottica key executives with the involvement
of more than 800 employees across the two organizations.
First steps include:
- The creation of one single supply chain and
prescription laboratories network
- The integration of Costa in the Luxottica’s
brand portfolio and frame network
- A systematic review of office space real
estate at the country level, looking at opportunities to co-locate
teams whenever possible
- A pilot project in Italy to define one
single IT platform to be quickly rolled out across the Company’s
organization
Acquisitions and
partnerships
- Closing of the Barberini acquisition. On August 30, 2019,
Luxottica announced the closing of the acquisition of Barberini,
the world’s leading optical glass lens manufacturer, after
obtaining all the relevant antitrust authorizations. The
acquisition allows the company to strengthen its "made in Italy"
production and its know-how in glass sun and prescription lenses,
always considered a success factor for the iconic models of Ray-Ban
and Persol. The company will invest in Barberini to create a
worldwide brand synonymous with excellence in high-quality optical
glass lenses. Barberini will continue to operate with all eyewear
producers that want to differentiate their products by adding the
uniqueness of optical glass to their lenses.
- Acquisition of Optimed. Essilor has acquired a majority stake
in Optimed Australia Pty, a leading ophthalmic instruments
distributor in Australia and New-Zealand which generates annual
revenue of about Euro 10 million.
OutlookEssilorLuxottica
confirms its financial objectives for 2019. Including synergies and
at constant exchange rates2, it is projecting the following:
- Sales growth: +3.5-5.0%
- Adjusted6 operating profit growth: 0.8-1.2x sales growth
- Adjusted6 net profit growth: 1.0-1.5x sales growth
Subsequent eventOn October 22,
2019, Luxottica and CHANEL confirmed the early
renewal of an exclusive license agreement for the development,
production and worldwide distribution of sunglasses and
prescription frames under the CHANEL brand. The
eight-year renewal will be effective starting January 1, 2020,
immediately following the expiration of the existing agreement, and
is scheduled to expire on December 31, 2027.
Conference callA conference
call in English will be held today at 11:30 am CET.The meeting will
be available live and may also be heard later at:
https://hosting.3sens.com/EssilorLuxottica/20191030-1D441EE8/en/webcast/startup.php
Forthcoming investor
event ·March 6, 2020:
Full-year 2019 results
Notes to the press release
1 Pro forma:
the unaudited pro forma consolidated revenue for the nine and
three-month period ended September 30, 2018 was prepared for
illustrative purposes only and with the aim to provide comparative
information as if the combination between Essilor and Luxottica had
occurred on January 1, 2018. It reflects consolidated revenue of
both groups after elimination of intercompany transactions between
Essilor and Luxottica.2 Constant exchange rates:
figures at constant exchange rates have been calculated using the
average exchange rates in effect for the corresponding period in
the previous year. 3 Like-for-like: growth at
constant scope and exchange rates.4
Fast-growing countries or markets: include China,
India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle
East, Russia, Eastern Europe and Latin America.5 Comparable
store sales or comps: reflect, for comparison purposes,
the change in sales from one period to another by taking into
account in the more recent period only those stores already open
during the comparable prior period. For each geographic area, the
calculation applies the average exchange rate of the prior period
to both periods.6 Adjusted measures: adjusted from
the expenses related to the combination between Essilor and
Luxottica and other transactions that are unusual, infrequent or
unrelated to the normal course of business as the impact of these
events might affect the understanding of the Company’s
performance.
EssilorLuxottica is a global leader in the
design, manufacture and distribution of ophthalmic lenses, frames
and sunglasses. Formed in 2018, its mission is to help people
around the world to see more, be more and live life to its fullest
by addressing their evolving vision needs and personal style
aspirations. The Company brings together the complementary
expertise of two industry pioneers, one in advanced lens technology
and the other in the craftsmanship of iconic eyewear, to set new
industry standards for vision care and the consumer experience
around it. Influential eyewear brands including Ray-Ban and Oakley,
lens technology brands including Varilux® and Transitions®, and
world-class retail brands including Sunglass Hut and LensCrafters
are part of the EssilorLuxottica family.In 2018, EssilorLuxottica
had nearly 150,000 employees and pro forma consolidated revenues of
Euro 16.2 billion. The EssilorLuxottica share trades on the
Euronext Paris market and is included in the Euro Stoxx 50 and CAC
40 indices. Codes and symbols: ISIN: FR0000121667; Reuters:
ESLX.PA; Bloomberg: EL:FP.
CONTACTS
EssilorLuxottica Investor
Relations(Charenton-le-Pont) Tel: + 33 1 49 77 42
16(Milan) Tel: + 39 (02) 8633 4870E-mail:
ir@essilorluxottica.com |
EssilorLuxottica Corporate
Communications(Charenton-le-Pont) Tel: + 33 1 49 77 45
02(Milan) Tel: + 39 (02) 8633 4470E-mail:
media@essilorluxottica.com |
APPENDICES
EssilorLuxottica consolidated revenue by
quarter and operating segment
In millions of Euros |
2019 |
2018Pro forma1 |
First Quarter |
|
|
Lenses & Optical Instruments |
1,674 |
1,554 |
Sunglasses & Readers |
200 |
189 |
Equipment |
44 |
40 |
Essilor revenue |
1,918 |
1,783 |
Wholesale |
838 |
819 |
Retail |
1,454 |
1,314 |
Luxottica revenue |
2,292 |
2,133 |
Total Revenue |
4,210 |
3,916 |
Second Quarter |
|
|
Lenses & Optical Instruments |
1,703 |
1,582 |
Sunglasses & Readers |
256 |
218 |
Equipment |
55 |
54 |
Essilor revenue |
2,014 |
1,853 |
Wholesale |
921 |
884 |
Retail |
1,632 |
1,524 |
Luxottica revenue |
2,552 |
2,408 |
Total Revenue |
4,566 |
4,261 |
Third Quarter |
|
|
Lenses & Optical Instruments |
1,713 |
1,559 |
Sunglasses & Readers |
187 |
165 |
Equipment |
53 |
43 |
Essilor revenue |
1,953 |
1,767 |
Wholesale |
749 |
718 |
Retail |
1,608 |
1,492 |
Luxottica revenue |
2,357 |
2,209 |
Total Revenue |
4,310 |
3,977 |
EssilorLuxottica consolidated revenue by
quarter and geographical area
In millions of Euros |
2019 |
2018Pro forma1 |
First Quarter |
|
|
North America |
2,189 |
2,007 |
Europe |
1,054 |
1,014 |
Asia, Oceania and Africa |
707 |
655 |
Latin America |
259 |
240 |
Total |
4,210 |
3,916 |
Second Quarter |
|
|
North America |
2,394 |
2,204 |
Europe |
1,177 |
1,136 |
Asia, Oceania and Africa |
728 |
681 |
Latin America |
267 |
239 |
Total |
4,566 |
4,261 |
Third Quarter |
|
|
North America |
2,298 |
2,110 |
Europe |
1,034 |
969 |
Asia, Oceania and Africa |
701 |
651 |
Latin America |
277 |
247 |
Total |
4,310 |
3,977 |
[*]As EssilorLuxottica announced on May 13,
2019, Leonardo Del Vecchio (Executive Chairman of EssilorLuxottica)
and Hubert Sagnières (Executive Vice Chairman of EssilorLuxottica)
empowered Francesco Milleri (Deputy Chairman - CEO of Luxottica
Group) and Laurent Vacherot (CEO of Essilor International) with the
responsibility to develop and implement the EssilorLuxottica
strategy and integration process.
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