EssilorLuxottica appears to have resolved its governance crisis, while at the same time announcing that its Australian retail business contributed strongly to international sales.
Both sides of the company’s Franco-Italian divide claim to have reached an agremeent to settle any existing disputes and continue the search for a new CEO.
The recently formed conglomerate issued a media statement ahead of a shareholder meeting this week, declaring the board of directors supported a settlement to end the infighting that has gripped the optical giant since its formation last October.
The tension stems from Mr Leonardo Del Vecchio, the executive chairman and founder of Luxottica, and Mr Hubert Sagnières, Co-CEO of EssilorLuxottica and CEO of Essilor, accusing one another of trying to take control of the group.
Both factions had initially agreed to share equal control over the company until 2021, however Del Vecchio publicly tapped his lieutenant and Luxottica CEO Mr Francesco Milleri to eventually take over.
Under the terms of the settlement, the board has now confirmed the search for a new CEO. Milleri and Mr Laurent Vacherot, Essilor International CEO, announced they would not be candidates for the position, but have assumed added responsibility to develop and implement the EssilorLuxottica strategy and integration process within the next two years.
Additionally, all existing claims will be waived and legal proceedings will be terminated. This includes a request for arbitration filed by Del Vecchio’s family holding company Delfin before the International Chamber of Commerce.
“I’m very pleased of this outcome. The industrial rationale of the combination is even stronger when looking at all the opportunities raised during the meetings of the Integration Committee,” Del Vecchio said. “Today, respecting the equal power and the Combination Agremeent, we have found a solution to better execute such strategic combination.”
Sagnières added: “With these decisions driving to a more unified company, EssilorLuxottica is well positioned to accelerate its growth in order to achieve its mission.”
News of the settlement comes after EssilorLuxottica released its first quarter financial results for FY19. Strong performances by OPSM and Sunglass Hut across the company’s Australasian retail business contributed to a 7.5% (+3.7% at constant exchange rates) consolidated revenue increase to euro 4.2 billion (AU$6.8b), compared with the same period in the previous year.
Sustained momentum in Essilor’s lenses and optical instruments, and Luxottica’s retail business, were major drivers behind the revenue rise, as well as notable returns across all regions.
In the Asia, Oceania and Africa region, the company generated revenue of euro 707 million (AU$1,145 m), achieving a “solid” like-for-like revenue increase of 8% (+5.9% at constant exchange rates). Both the optical and sun retail businesses in Australia were singled out for continuing to record comparable store sale figures close to mid-single digits.
“In the retail division, performance in Australia and New Zealand once again confirmed the strength of OPSM and Sunglass Hut, and a solid execution of a successful new refurbishment program,” a company press release said.
In announcing the FY19 first quarter results Del Vecchio said: “I am very satisfied with the results of the first quarter of EssilorLuxottica, with all its business areas growing. Luxottica contributed with an excellent performance that recorded accelerating sales, confirming the power of the strategic choices and the commercial policies undertaken.”
Sagnières added: “2019 is off to a good start and Essilor’s contribution has been robust in terms of business, new product developments and acquisitions as well as in the ramp up of the first synergy work streams with Luxottica.”