Jul 27, 2015
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Strong dollar, hot weather help Luxottica quarterly profit jump 25 pct

Jul 27, 2015

A strong dollar and hot weather in Europe helped Luxottica, the world's biggest eyewear group, achieve a 25 percent rise in net income for the second quarter, it said on Monday.

The Italian group confirmed its full-year guidance of mid-to-high single digit growth in sales and that operating and net income would increase twice as fast as sales in percentage terms.

Luxottica Collections for Armani - Luxottica

Luxottica also saw sales surge in China in the second quarter. The country only accounts for 2 percent of global sales but is growing fast and a strengthening of the Chinese yuan currency drove sales in the period up 48 percent.

The company plans to cut prices in China in coming quarters and in other Asian countries whose currencies have appreciated, "though not aggressively", to align prices more globally as many Chinese and other consumers purchase while travelling outside their home country, co-Chief Executive Massimo Vian told Reuters by phone.

Luxottica shrugged off concerns about the health of the Chinese economy and said that stripping out currency effects, Chinese sales rose 20 percent in the three months through June.

"Ray Bans are doing great in China and beginning to fulfil their potential in both the prescription and sunglasses segments," Vian said.

The United States remains by far Luxottica's biggest market, followed by Europe where the company has benefited from some unseasonally high temperatures in parts in the past two months, boosting demand for sunglasses.

"The third quarter got off on the right foot," Vian said. "We presented our latest (eyewear) collection in July under a scorching sun that put a smile on our face," he added.

The Asia-Pacific now accounts for 13 percent of global sales and Vian said emerging markets remained the priority for potential acquisitions.

In the United States, where Luxottica runs retail chains LensCrafters and Pearle Vision, a strong dollar helped North America sales rise by around 29 percent in the second quarter, to account for 57 percent of its total sales.

In the second quarter revenue totalled 2.46 billion euros ($2.7 billion), up 19 percent from a year ago and matching a Thomson Reuters SmartEstimate. Sales were up 5 percent at constant currencies.

Net income was 295 million euros, a touch below an analyst consensus of 304 million euros due to a 20 million euro hit from costs linked to the integration into Luxottica of Oakley, the Californian brand bought in 2007.

The integration, which should be completed by the end of 2015 and eventually yield around 100 million euros in annual synergies, will cost another 30 million euros this year.

Vian, an engineer who joined Luxottica in 2005, took over as co-CEO in January flanked by former Procter & Gamble manager Adil Mehboob-Khan, who oversees markets.

Vian said Stefano Volpetti would soon be appointed new chief marketing officer after the exit of veteran manager Fabio D'Angelantonio.

D'Angelantonio was close to former CEO Andrea Guerra, who left in September after a decade at the helm of Luxottica following a rift with company founder and key shareholder Leonardo del Vecchio.

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