INTERNATIONAL. Luxottica Group has announced total net sales of €5,798.0 million in the fiscal year 2010 ended 31 December, a solid +13.8% growth (+7.1% at constant exchange rates) over 2009. The company has described this as an “unprecedented figure never before seen in the history of Luxottica”.
Net sales in the fourth quarter of 2010 amounted to €1,346.5 million, representing a similar robust growth of +16.4% (+6.5% at constant exchange rates) over the same period in 2009.
The strong growth of net sales was accompanied by a more than proportionate increase in profitability relative to sales growth, as well as a significant improvement in financial leverage, Luxottica added.
Both Wholesale and Retail divisions made a major contribution to the results, thanks to their exceptional work carried out in all the geographic areas in which the group operates.
Adjusted EBITDA for 2010 recorded significant growth (+20.7% on 2009) at €1,034.2 million, underlining the success of Luxottica’s strategy to increase profitability.
The adjusted EBITDA margin increased from the 16.8% recorded for 2009 to 17.8% in 2010. In the fourth quarter of 2010, adjusted EBITDA showed a +32.7% increase from the same period of the previous year, to €192.8 million, with an adjusted EBITDA margin of 14.3% (12.6% in the fourth quarter of 2009).
Growth in adjusted operating income for 2010, amounting to €732.6 million, was even more marked – +28.3% from the figure recorded at the end of 2009. The group’s adjusted operating margin increased from 11.2% for 2009 to 12.6% for 2010.
In the fourth quarter of the year, adjusted operating income was €116.6 million as compared with €74.0 million recorded for the same period of the previous year (+57.5%), with an adjusted operating margin up from 6.4% to 8.7%.
In 2010 the Retail division recorded operating income of €424.4 million, up by +17.6% on 2009, with an operating margin of 11.9% (+40 bps). In the fourth quarter of 2010, operating income was €70.5 million, +40.8% from the same period of the previous year, with an operating margin of 8.5%, +140 bps.
The operating income of the Wholesale division in 2010 amounted to €461.9 million (+29.7% on 2009), with an operating margin of 20.7% (+250 bps as compared with the previous year). In the fourth quarter of 2010, the division recorded operating income of €89.6 million, +49.5% as compared with the same period of 2009, with an operating margin of 17.5% (13.4% in the fourth quarter of 2009).
Adjusted net income for 2010 amounted to €402.7 million, up +34.6% from €299.1 million for last year, corresponding to an adjusted Earnings per Share (EPS) of €0.88. In the fourth quarter of 2010, adjusted net income almost doubled, going from €29.3 million to €55.6 million (+90.1%).
 |
Click here to view the enlarged image (then hover over graphs with your cursor and click for full detail) |
“We are particularly satisfied with these results, obtained in a context in which only truly extraordinary companies and brands enjoy success,” commented Luxottica Chief Executive Officer Andrea Guerra.
“2011 is a particularly important year for Luxottica, as it is the 50th anniversary since our founding. Celebrating 50 years of Luxottica is an extraordinary event since we are enjoying enormous success after only one generation and, above all, we have shown that at the heart of our DNA are growth and innovation.
“In the last four years alone, Luxottica has invested approximately €3 billion in its growth, continuing to build upon an exceptional brand portfolio and a network of retail stores that is unparalleled worldwide.
“I believe that 2011 will prove to be the natural evolution of 2010 and a year filled with great success for the group. There are many great opportunities to ensure solid growth for Luxottica, both in emerging and more mature markets. In order to enjoy success in 2011, it will be important to maintain the same passion, the same attention to planning on the one hand and to impeccable execution on the other, as well as making the most of opportunities wherever they may arise, simply and quickly.
“The first two months of the 2011 year were particularly positive. In January and February, net sales of the Wholesale division worldwide grew by more than +15% as compared with the same period of the previous year, and the Retail division in North America recorded comparable store sales up by approximately +6%.”
 |
Click here to view the enlarged image (then hover over graphs with your cursor and click for full detail) |
ACTION PLANS FOR 2011
In addition to the growth trends enjoyed worldwide by the premium and luxury brands, which are expected to continue in 2011 at double-digit rates, there will be four main engines behind Luxottica’s growth for this year: further development in emerging markets, the global expansion of Sunglass Hut, growth in the United States and the potential of Oakley.
Development in emerging markets
In 2011, emerging markets will represent a “formidable driving force” for both Luxottica divisions, the company noted.
These countries – which already today account for approximately 15% of the net sales of the Wholesale division and 7% of the group’s consolidated sales – have recorded “excellent” results over the last six years, with a +220% increase in sales.
It is expected that in 2011 Luxottica will continue this trend of sustained development: net sales of the Wholesale division in these countries are expected to increase by about +20%.
Luxottica has highlighted three geographic areas within emerging markets: the Big markets (including China, India, Brazil and Mexico), the Mature markets (including Singapore, Hong Kong, Taiwan and Chile) and the New markets (including Thailand, Vietnam, Indonesia, Colombia and Peru).
For each area, a specific strategy has been developed over time, with the aim of stimulating demand and increasing penetration of Luxottica’s brands via special initiatives and collections.
In Asia in particular, volumes sold in the Big emerging markets should grow by +120% over the next three years, in the Mature emerging markets by approximately +30% and in the New emerging markets by +60%.
The volumes sold in the New emerging markets in Latin America over the next three years are expected to increase by approximately +60%.
Net sales of the Retail division are also expected to enjoy strong growth (about +20%) in 2011 in Emerging markets, thanks to the Sunglass Hut development plan and the strong performance in China.
After two years of challenges, the last 15 months have shown a continuous trend of increasing sales in China, thanks to the efforts made by the new management and the dynamism of the entire organisation. For 2011, comparable store sales are expected to increase significantly (+20%), driven by the expected success of the optical and sunglass collections and the opening of 50 new optical stores. The number of Luxottica stores in China is expected to grow to 500 by 2013.
The total number of Luxottica stores in emerging markets is expected to grow from the current 6% of the total to 12% in 2012.
The global expansion of Sunglass Hut
In 2010, Sunglass Hut recorded +8.4% growth in comparable sales recorded worldwide and +11.1% in North America – the best results in the history of the brand, according to Luxottica.
The group attributes the performance to the relationships that Sunglass Hut has created with its current and potential consumers, creativity and speed in developing new initiatives focused on these customers; and an ability to tell a compelling story of the brand and products, thereby ensuring the customer an unparalleled buying experience.
This recipe for success will also be applied in 2011, a year during which Sunglass Hut is expected increase net sales through small and medium investments in new opportunities worldwide, particularly in the “˜sun belt’ countries and in the travel retail and department stores businesses.
 |
 |
In 2011 Sunglass Hut will add 270 more stores worldwide; total number of stores is expected to hit 4,000 by 2015 |
Following the recent acquisitions in Mexico, it is expected that Sunglass Hut will open its first store in Brazil during the first half of 2011, with 15 stores expected by the end of the year.
Thanks to expansion plans in India – where Sunglass Hut aims to have 40 stores by the end of the year – the chain is expected to add 270 more stores worldwide, an increase of more than +12%. The number of Sunglass Hut stores is expected to reach the 4,000 mark by 2015.
The US market
The US is a key market for the group. 2010 saw Luxottica record strong growth thanks to LensCrafters, which delivered its best results since 2006.
In 2011, LensCrafters looks to benefit from the innovations that the group is introducing both in terms of products and services. A major focus will be on laboratories, which today are “technologically cutting edge in lens manufacturing and finishing and able to offer an excellent level of service”, Luxottica said. The results of the first two months of 2011 confirm the validity of the initiatives implemented during the last few quarters and the targets for 2011.
Net sales for the Retail division in North America are expected to grow by +4% to +7%, while the Wholesale division is expected to achieve double-digit growth in net sales in 2011 in the North American market.
Oakley
After the fifth consecutive year of double-digit growth, during which the net sales of the brand exceeded US$1.1 billion, in 2011 Oakley will continue to play a key role in Luxottica’s development. Net sales in 2011 are expected to grow by more than +10%.
Further benefits will be gained from the expansion of activities in India, China, Brazil and Europe – regions that are expected to grow significantly. The brand’s success is dependent on the ability to combine the approach and global visibility of the brand with an interpretation of local demands comprising dedicated approaches and styles, Luxottica explained.
Investments in commercial policy, style and technology for the optical business – whose 2010 net sales were up by +15% – will also increase. More specifically, in 2011 the innovative technology TrueDigital for prescription lenses, which significantly improves vision quality for athletes and sport enthusiasts, will be launched in Europe and Asia Pacific.
Investments in style and an even more efficient management of the product portfolio are expected to result in double-digit growth in the sun segment, both for men and women.
 |
2011 net sales for Oakley, with cyclist Lance Armstrong among its ambassadors, are expected to grow by over +10% |
