Luxottica expects to improve its net profit margin to at least 10 percent this year on a consolidated turnover that will break for the first time the barrier of 4 trillion lire (e2bn), following better-than-expected results in the 4th quarter. At the wholesale level, group orders as of last Dec. 31 were more than 50 percent higher than a year earlier. Furthermore, the results of the group's US-based Lenscrafters chain of optical stores are improving rapidly, leading the management to budget an increase in its operating margin from 12 percent in 1999 to 13 percent in the year 2000.
In 1999, the Italian group raised its turnover by 21.8 percent 3,628.8 billion lire (e1,873.7m), thanks in part to the consolidation of Ray-Ban and other former Bausch & Lomb sunwear brands as of last July 1. Still, two-thirds of group turnover is still accounted for by sales through its LensCrafters chain, whose sales grew by 13.1 percent to the equivalent of 2,292.4 billion lire (e1,184.1m), including a 6.9 percent increase on a comparable-store basis.
The group's net income rose more slowly than sales last year. It grew by 14.6 percent to 295.2 billion lire (e152.4m), indicating a net consolidated margin of 8.1 percent, but the 4th quarter showed a higher net margin of 8.6 percent as net earnings surged by 39.9 percent to 79.8 billion lire (e41.2m) on 36.7 percent higher turnover of 930.1 billion lire (e480.3m). Gross profit was up 20.7 percent for the year to 70.6 percent of sales.
The group sold a total of 23.8 million frames around the world last year, or 25.2 percent more than in 1998. The acquisition of Ray-Ban contributed to a year-on-year growth of 39.9 percent in the 4th quarter to 6 million frames.
At the wholesale level, Luxottica's deliveries of frames rose by 32.7 percent in 1999. The manufacturing/wholesale turnover rose by 29.1 percent to 1,520.8 billion lire (e785.5m), indicating more aggressive sales policies. Excluding Ray-Ban, wholesale sales were up 19.4 percent.
Group CEO Leonardo Del Vecchio confirms that Ray Ban's integration into the group is now complete. Production has been transferred from the US plants to the European ones, logistics operations have been centralized, with warehousing transferred to Luxottica's distribution centers in the USA and Italy.
At retail, LensCrafters, which operated a total of 861 stores in North America as of last Dec. 31, improved its financial performance particularly in the 4th quarter, although its sales rose by only 10.4 percent in the period.
The group's debt was further reduced during the last quarter by $31.5 million to $1,136.2 million, but it remains high as a result of a 1,200 billion lire loan ($640m) contracted out earlier last year. Half of it was used for the takeover of Ray-Ban, whose integration cost more than expected by by Del Vecchio's admission.