Luxottica confirmed last week its recent guidance of a 16 to 17 percent rise in sales in 2008, based on constant exchange rates, to €5.60-5.75 billion. That forecast was was already released in February and is based on an average euro-to-dollar rate of 1.45. The rate now stands at around 1.58. There had been some concern that the dollar's depreciation could put the target at risk.

The company estimates that the outlay for its integration of Oakley will be higher and synergies lower in the first half of the year compared with the second. Non-recurrent costs from the takeover are estimated at €7 million in the first quarter, €8 million in the second, €7 million in the third and €3 million in the fourth. On the other hand, operating synergies will rise from €2 million in the first three months to €5 million in the second, €6 million in the third and €7 million in the fourth. Overall, one-off costs linked to the integration of Oakley will amount to €25 million in 2008 and €5 million in 2009, while cumulated synergies should reach €20 million this year, €60 million in 2009 and €100 million in 2010.

Operating margins for the group's retail business are expected to fall by 2.0-2.5 percentage points in the first quarter if worldwide like-for-like sales are flat or grow by 2 percent. The drop in the margin would reach 2.5-3.0 percentage points if sales are flat or decline by 2 percent. Luxottica's retail sales in North America are declining in line with the fourth quarter of 2007, when comparable store sales fell by 3.0 percent year-on-year for the optical chains.

In the first three months of 2007, Luxottica's retail business had an operating margin of 12.2 percent. The margin declines to 11.8 percent if Oakley is consolidated. The company's full-year guidance is for an increase in the retail operating margin of 0.25 to 0.50 percentage points with comparable store sales up 0 to 2 percent. With sales flat to down 2 percent, margins are seen increasing between zero and 0.25 percentage points. In 2007, Luxottica's retail margin was 11.1 percent including Oakley. The wholesale division, the most profitable and also the one benefiting the most from the acquisition of Oakley, is expected to increase operating margins by 0.75-1.00 percentage points in the first quarter and 1.00-1.25 points for the full year.

In 2007, Luxottica's pro forma wholesale operating margin including Oakley was 23.3 percent in the first three months and 23.0 percent in the full year. Luxottica also released final 2007 results, complementing preliminary data issued in February, indicating that sales rose by 6.2 percent to €4.966 billion, or €1 million less than previously announced. The data included an €87 million contribution from Oakley that was consolidated for six weeks. Retail revenues fell by 1.8 percent to €3.234 million and the turnover in wholesale jumped 16.2 percent to €1.993 billion. Operating profits increased by 10.2 percent to €833 million, representing 16.8 percent of sales.

The retail business booked a 16.2 percent drop in operating profits to €362 million, or a margin of 11.2 percent, and wholesale's earnings soared 18.4 percent to €528 million with a margin of 26.5 percent. Net profits totaled €492 million, up 14.3 percent. Net debt stood at €2.872 billion at the end of 2007, or 2.5 times a pro forma EBITDA of €1.166 billion that includes Oakley for the whole of 2007.

Luxottica indicated that the wholesale division grew in all regions during the first two months of 2008 while the retail business was steady compared with the previous year.