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Essilor, Luxottica sales dip ahead of merger

Essilor and Luxottica have both reported a drop in first quarter earnings compared to the previous year, with fluctuating currencies, bad weather and a dip in wholesale revenue cited as the main contributors to the muted performance.

With the conclusion of the highly-anticipated merger approaching, sales for France-based Essilor dropped 5.8% to €1.8 billion (AU$2.8 b), due primarily to the weakness of key US, Chinese and Brazilian currencies against the euro.

The strength of the euro resulted in a negative currency effect of 9.6%, due to products becoming more expensive for international buyers, and the impact on dollar revenues when converting to euros.

"We are confident that we will meet our full-year targets as the rollout of new products gathers pace over the next few months"
Hubert Sagnières, chairman and CEO of Essilor

“After this sound start to the year, notably thanks to good performances in sunwear and e-commerce, we are confident that we will meet our full-year targets as the rollout of new products gathers pace over the next few months,” chairman and CEO Mr Hubert Sagnières said in the company’s first quarter update.

Meanwhile, Italian eyewear company Luxottica also reported an 11% drop in sales revenue due to the currency swing, wholesale distribution activity, and bad weather.

The company’s wholesale revenue recorded the largest decrease of 4.2% at constant exchange rates, as bad weather in Europe caused retailers to delay orders and tighter policies for wholesale distribution posed challenges.

In the retail division, the strong performance of Sunglass Hut stores contrasted with weaker than expected sales of sunglasses in Europe and continuing difficulties at the group’s US optical retailer LensCrafters, which resulted in a 0.6% fall.

However, despite the overall 0.8% revenue drop at constant exchange rates to €2.136 billion (AU$3.36 b), company management stressed it had not impacted the overall 2018 outlook.

The €48 billion (AU$76 b) merger gained approval from European and US competition regulators in March and is expected to conclude this year.


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