After announcing a healthy 38.9 percent rise in turnover in the first 6 months of this year, as reported in the last issue of Eyewear Intelligence, De Rigo can now boast a sharp increase in earnings for the same period. They shot up from to 13.5 billion lire (e 6.97m-$6.2m) from 3 billion lire in the year-ago period, proving the wisdom of the group's decision to invest in the retail business through the purchase of major retail chains, as Luxottica has done with LensCrafters. The net profit margin has risen to 2.9 percent from the depressed 0.9 percent level of the first 6 months of 1999.
As previosly indicated, the group's turnover got its biggest boosts from the acquisition of General Optica last February and the first revenues of Eyewear International Distribution (EID), the joint venture with Prada. While revenues from De Rigo's traditional wholesale activities were relatively flat, General Optica and Dollond & Aitchison's joint turnover rose from 220.3 to 327.8 billion lire (e169.3m-$149.5m).
On a comparable basis, excluding GO, operating expenses would have increased by 16 percent reflecting mainly the appreciation of the pound sterling and the cost of setting up EID. Neverthless, the group's retail operations enjoyed a big surge in earnings before interest and tax (EBIT) from 5.4 to 20.2 billion lire (e m-$m), representing 6.16 percent of turnover. With EBIT of 2.4 billion lire (e1.2m-$1.1m), EID reached a healthy 9.7 percent margin at its start-up. On the other hand, the operating profit (EBITDA) of the group's production and wholesale operations dropped from 23.4 to 21.2 billion lire (e11m-$9.7m), but their EBIT grew slightly, from 9.2 to 10 billion lire (e5.2m-$4.6m), representing 8.38 percent of turnover.
Capital expenditures trebled in the period to 21.4 billion lire (e11m-$9.8m) and they involved partly the opening of 6 new GO stores. GO's acquisition caused a reversal in the balance sheet to net debt of 106.1 billion lire (e54.8m-$48.4m) as of last June 30 1999 from net assets of 54.4 billion lire one year earlier. A new credit line of 290.4 billion lire (e150m-$132.5m) helped finance the 212.3 billion lire (e109.7m-$96.8m) invested in the acquisition of GO.