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Luxottica: 1Q06 operating income rises by 40.3%

April 28 2006

Luxottica Group yesterday announced consolidated U.S. GAAP results for the first quarter of 2006 and the proposed cash dividend payment for fiscal year 2005.

Financial highlights for the first quarter of 2006:
- Consolidated sales: € 1,262.0 million (+21.7%; +14.2% at constant exchange rates); retail sales € 890.9 million (+17.7%); retail comparable store sales +8.3%; total wholesale sales € 455.6 million (+39.4%; +34.6% at constant exchange rates);
- Consolidated operating income: € 191.5 million (+40.3%); operating margin 15.2%; retail operating income € 112.1 million (+46.6%); retail operating margin 12.6%;wholesale operating income € 118.4 million (+52.3%); wholesale operating margin 26.0%;
- Consolidated net income: € 103.2 million (+35.3%); net margin 8.2%;
- Earnings per share: € 0.23 (U.S.$ 0.27 per ADS).

The Board of Directors also scheduled the Company's Ordinary and Extraordinary Shareholders' Meetings for June 14, 2006, on first call, and for June 15, 2006, on second call. At the Ordinary Meeting, the Board of Directors has approved Luxottica Group's International Financial Reporting Standards (IFRS) financial statements for fiscal year 2005 and will propose to shareholders a 26 percent increase in the cash dividend to be paid for fiscal year 2005 to €0.29 per ordinary share and per American Depositary Share (ADS, one ADS represents one ordinary share). Board recommends the appointment of two new independent directors, bringing the total to six out of 14.

Andrea Guerra, chief executive officer of Luxottica Group, commented: 'Our strong results for the first quarter represent a particularly encouraging beginning for 2006. Sales were up significantly in both wholesale and retail, by 39.4 percent and 17.7 percent, respectively, reflecting continued strength in our wholesale business and strong execution on our retail strategy - both in North America and Asia-Pacific. I am especially pleased with the significant improvement in profitability for the quarter, reflected in a year-over-year 200 basis points rise in consolidated operating margin'.

'Results of our wholesale division were extremely positive, with strong sales performance in all the markets where we operate. Fashion and luxury brands across our entire brand portfolio -especially Prada, Bvlgari and Chanel in addition to the recently launched Dolce & Gabbana collections - enjoyed strong demand. Ray-Ban had another strong quarter, after the spectacular growth experienced in 2005 and three consecutive years of 20 percent growth. Operating margin for the entire wholesale division for the quarter improved to 26.0 percent, up year-over-year by 220 basis points'.

This was another strong quarter for the Group's retail operations, with operating income rising significantly above the improvement in sales. In North America, overall performance across the entire division was above that of the premium retail sector in that market. Both LensCrafters and Sunglass Hut posted double-digit comparable sales growth - the fourth such quarter in a row for Sunglass Hut - while Pearle Vision enjoyed a second consecutive quarter of positive comparable store sales, while profitability for the quarter more than doubled. In Asia-Pacific, results were strong within the Group's optical business both in terms of sales and profitability following the repositioning of the OPSM brand and strong demand for Luxottica fashion brands.

On the profitability front, the overall strong performance resulted in an improvement of 250 basis points in operating margin for the entire retail division to 12.6 percent.

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