EssilorLuxottica reports “strong” first quarter results

Revenue rose above 2019 levels at constant exchange rates, though the recovery of the European market lagged behind others due to new restrictions and lockdowns

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EssilorLuxottica has seen revenue for the first quarter of the year rise above pre-pandemic levels, with company executives calling it a “strong start to the year.”

Releasing results for the first quarter, the company shared that consolidated revenue totalled €4060 million (approximately £3502 million) – representing a year-on-year increase of 7.3%, compared to the first quarter of 2020. This also marked a growth of 1.9% compared to the same period in 2019 (at constant exchange rates).

Furthermore, revenue improved compared to the growth of 1.7% seen in the fourth quarter of 2020. The company noted that momentum accelerated towards the end of the first quarter.

Describing the first quarter as a “strong start to the year,” Francesco Milleri and Paul du Saillant, respectively CEO and deputy CEO of EssilorLuxottica, commented: “While the pandemic continued to put up a fight, we fought harder, delivering significant revenue growth that surpassed pre-pandemic levels and met the structural need for good vision.”

Accounting for 75% of revenue, the optical business drove performance, the company noted, with “sound” prescription sales and optical retail.

Demand in the sunglass category bounced back in North America. Overall, though, revenue for sunglasses and readers was down 0.3% compared to the first quarter of 2019 (up 3.4% at constant exchange rates).

Revenue in the lenses and optical instrument category was down by 2.6% compared to the first quarter of 2019 (though, up 3.1% at constant exchange rates). However, the company highlighted a ramp-up of launches which drove business, including its Stellest lenses in China, and the Varilux Comfort Max, as well as the continued roll-out of Transitions Signature Gen 8 photochromic lenses, AVA lenses and the Vision R-800 phoropter.

The company found that e-commerce saw an increase – up 47% compared to 2020, and 61% compared to 2019. EssilorLuxottica explained the proprietary mono-brand platforms as a whole saw a “doubling” in revenue.

Revenue in the equipment category rose 2.7% compared to the first quarter of 2019, the company shared, suggesting: “This was mainly due to the delivery of the strong backlog accumulated at the end of 2020, mostly reflecting pent-up demand from the pandemic.”

The wholesale division saw revenue down 10.5% compared with the first quarter of 2019, with the sun category remaining “soft” while optical consolidated a trajectory of growth that the company saw beginning in the third quarter of 2020.

Varied recovery across markets

Comparing recovery across markets, the company found that North America showed strong signs of demand recovery across channels, while Greater China – which makes up the company’s second biggest market in revenue – and Australia particularly drove growth.

In contrast, Europe lagged behind, the company shared, “due to new restrictions related to the COVID-19 pandemic.”

This pattern was reflected in the retail business. The category saw revenue down 1.1% compared to the first quarter of 2019, but up 4% at constant exchange rates. The company suggested that new restrictions caused additional store closures in specific areas, particularly in Europe and Brazil in March, despite this – the company said it kept just over 90% of its 6736 locations open through the quarter.

Looking specifically at the European market, the company suggested revenue in Europe decreased by 9.6% compared to the first quarter of 2019.

In lenses and optical instruments revenue was slightly higher than first quarter 2019 levels at a constant exchange rate. Turkey, France, the Nordics, Russia and Eastern European countries were among the best performers, the company noted, delivering positive revenue growth. In contrast, Southern European countries such as Spain and Portugal, as well as the UK, Germany and the Benelux (Belgium, the Netherlands and Luxembourg) were impacted by the pandemic and so weighed negatively on the division’s performance.

The company noted that optical instruments saw a good performance in Europe in the first quarter, while e-commerce saw a strong growth.

Sunglasses and readers revenue was particularly affected by the pandemic, the company shared, “dragged by the underperformance of the sunglass activity due to the impact of COVID-19 lockdowns in the UK and Italy and to the lack of tourism flows.”

In the retail segment, Europe saw a deceleration compared with the second half of 2020. E-commerce, however, saw growth of over 200% compared to the first quarter of 2019.

Milleri and du Saillant explained that the company integration continues to gain further momentum and progress, “while continuing to make new bolt-on acquisitions.” This included a joint-venture partnership with CooperCompanies for the acquisition of SightGlass, a life sciences company focused on developing spectacle lenses to reduce the progression of myopia.

Describing the outlook for the year ahead, the company suggested it now has the ambition to “deliver a performance that is at least comparable to 2019 in both revenue and adjusted operating profit margin, at constant exchange rates.”