Luxottica posted a 7.9 percent sales increase to €2,015 million for the fourth quarter of 2015, coming short of analysts' expectations of a turnover of €2,130 million for the period. On a currency-neutral basis, the group's revenues went up by only 2.0 percent.

Adjusted revenues went up by 8.9 percent in euros and by 2.7 percent in local currencies, reaching €2,059 million. The adjusted figure does not take into account a change in the reinsurance agreement for EyeMed, the group's U.S.-based vision insurance program, which reduced revenues by €44.2 million in the quarter and by €174.3 million in the full year.

The group's quarterly wholesale revenues rose by 7.7 percent at actual currency rates and by 7.1 percent at constant rates, up to €758 million. Quarterly retail sales were up by 8.0 percent at current rates to €1,256 million, but dropped by 1.2 percent in local currencies. Adjusted retail sales totaled €1,301 million, up by 9.6 percent at current rates and up by 0.1 percent at constant rates. On a comparable store basis, retail sales rose by 2.2 percent in the fourth quarter, with a 5.3 percent increase for Sunglass Hut.

Luxottica Group Net Sales

(Million Euros, Year ended Dec. 31)

 

2015

2014

%
Change

%
Change
(currency
neutral)

Wholesale

3,593

3,194

12.5

6.9

Retail

5,244

4,459

17.6

2.3

         

North America

5,325

4,333

22.9

3.7

Europe

1,625

1,507

7.8

6.8

Asia Pacific

1,178

1,050

12.2

5.5

Latin America

543

506

7.3

15.1

Rest of the World

339

303

11.9

8.8

Total

9,011

7,699

17.0

5.5

Adjusted North American sales represented 60 percent of the group's total revenues in the quarter, and they rose by 10.7 percent to €1,229 million in reported terms, but on a currency-neutral basis, they fell by 1.7 percent. The region's wholesale revenues were up by 14.6 percent on a reported basis and by 2.8 percent at constant currency rates, reaching €221 million.

Adjusted retail sales were up by 9.9 percent in North America to €1,008 million, lifted by higher comparable store sales, but they were still down by 2.7 percent at constant currency rates. On a same-store basis, they rose by 1.2 percent for LensCrafters and by 5.9 percent for Sears Optical and Target Optical. Sunglass Hut's performance remained positive despite a slowdown in tourism.

Luxottica Group Consolidated Income Statement

(Euros' 000, Year ended Dec. 31)

 

2015

2014

%
Change

NET SALES

8,836,578

7,652,317

15.5

Cost of Sales

2,835,426

2,574,685

10.1

Selling Expenses

2,778,837

2,352,294

18.1

Royalties

168,669

149,952

12.5

Advertising Expenses

589,718

511,153

15.4

G&A *

1,087,484

906,620

19.9

Other Expense - Net

98,530

97,532

1.0

Pre-Tax

1,277,914

1,060,080

20.5

Tax

471,042

414,066

13.8

Minority Interest

2,753

3,417

-19.4

NET

806,873

646,014

24.9

Earnings/Share (Diluted)

1.68

1.35

24.4

*General and Administrative

Sales in Europe increased by 3.7 percent to €302 million in the quarter, with constant-currency sales up by 6.4 percent. In Asia-Pacific, they grew by 8.9 percent at current currency rates and by 7.4 percent in local currencies, nearly matching the European turnover with a total value of €291 million. Same-store sales were down by 1.3 percent in the group's optical retail business in Australia and New Zealand, however.

In Latin America, Luxottica's sales fell by 0.2 percent at actual currency rates but rose by 15.0 percent at constant rates, going up to €156 million.  In the rest of the world, sales increased by 22.6 percent at current exchange rates and by 13.0 percent in local currencies, reaching €81 million.

For the full year, Luxottica reported an increase of 15.5 percent to €8,837 million, including a 4.3 percent increase at stable currency rates. Adjusted sales totaled €9,011 million, up by 17.0 percent at actual rates and by 5.5 percent at constant rates.

Wholesale sales rose by 12.5 percent in euros to a total of €3,593 million for the year, and they were up by 6.9 percent at constant rates,. Adjusted retail sales grew by 20.3 percent to €5,418 million, but the rise was limited to 4.5 percent in local currencies.  Worldwide, same-store sales grew by 3.9 percent, driven by a 6.4 percent increase for Sunglass Hut.

North America raised its share of total group revenues to 59 percent last year from 56 percent in 2014, thanks to the strong U.S. dollar, as sales went up by 22.9 percent in the region to the equivalent of €5,325 million. However, in local currencies, the increase narrowed to 3.7 percent. The company pointed out that its retail business in North America was nine days shorter than in 2014, representing a sales shortfall of about €90 million. Comparable store sales rose by 3.9 percent in the region during the year, with LensCrafters up by 4.3 percent, licensed brands by 7.5 percent and Sunglass Hut by 4.7 percent.

In Europe, the company's annual revenues increased by 7.8 percent to €1,625 million, with a 6.8 percent increase in constant currencies. The strongest increases were recorded in Italy, Spain, Germany, the U.K., Eastern Europe and Turkey. European wholesale revenues rose by 5.1 percent in current and constant currencies to €1,361 million, driven by the roll-out of Luxottica's assortment planning and automatic replenishment system, STARS, which is now in place at more than 4,700 third-party doors in the region.

European retail sales surged by 24.9 percent, or by 17.3 percent at constant currency rates, to reach €265 million, with Sunglass Hut stores posting a double-digit growth rate in comparable store sales in Continental Europe and adding about 50 additional stores to its European network.

In Asia, the group's annual sales increased by 12.2 percent to €1,178 million, with a 5.5 percent increase in local currencies, driven by mainland China, Japan, India and Southeast Asia. Wholesale revenues surged by 19.7 percent, or by 8.6 percent at stable currency rates, to €518 million, but retail revenues in the region were higher at €660 million - up by 6.9 percent at actual rates and by 3.3 percent in local currencies.

In Australia and New Zealand, comparable store sales were up by 1.5 percent for the year, as double-digit growth at Sunglass Hut offset weaknesses at the OPSM optical chain. Overall, same-store sales were down 2.1 percent in the region.

In Latin America, annual sales rose by a reported 7.3 percent to €543 million, but in constant currencies, they jumped by 15.1 percent. In the rest of the world, revenues increased by 12.1 percent, or by 8.8 percent in local currencies, reaching a level of €339 million.

Luxottica said the first weeks of 2016 and its investment plans have set the stage for a year of “solid” growth, with earnings expected to outpace the increase in revenues.