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EssilorLuxottica Publish Q4 & Full Year 2021 Financial Results

EssilorLuxottica accelerating in the fourth quarter, above margin guidance targeting 19-20% margin in 2026

EssilorLuxottica including GrandVision (year-on-year change at constant currency):

• Reported Group revenue up 20% in FY versus 2019 and 40% versus 2020
• Comparable revenue up 11% in Q4 and 7.4% in FY versus 2019
• Best quarter of the year with all regions exceeding pre-pandemic revenue
• Double-digit growth in North and Latin America versus 2019, sunglasses accelerating
• E-commerce revenue crossing Euro 1.5 billion in FY, +62% versus 2019 in both Q4 and FY
• Adjusted operating profit pro forma as a percentage of revenue at 16.1% in FY

Long-Term Outlook (at constant currency):

• Annual revenue growth 2022-26 at mid-single digit
  
• Adjusted operating profit as a percentage of revenue at 19-20% in 2026

Francesco Milleri and Paul du Saillant, CEO and Deputy CEO of EssilorLuxottica, reported:
“Our thoughts go out to all those affected by the tragedy unfolding in Ukraine. At this difficult time, the safety of our people remains our priority and we are providing all the support possible to our affected teams in the region. Looking at our financial results, 2021 has been an extraordinary year for EssilorLuxottica. In the face of a continuously challenging environment, we managed to grow our sales and profits beyond pre-pandemic levels, meeting our guidance on sales and exceeding it on operating margin. In 2022, we continue to move full speed ahead, thanks to the trust of our customers and partners, and the commitment of our teams, now including our 39,000 GrandVision employees as part of our family. Our innovations and brands, like Stellest, Ray-Ban Stories and Transitions XTRActive, as well as still top-performer Oakley, are paving the way for a new generation of life-changing products, while launching entirely new categories that will benefit the whole industry. As we build EssilorLuxottica at the heart of our industry, we continue to grow as a socially conscious company. Sustainability remains front and center as we reach carbon neutrality in our two historic home countries Italy and France and work towards the next set of milestones. The future we’re building is a future for everyone – the talent, technology and tenacity we have in this moment is very powerful and we will do great things with it.”

EssilorLuxottica comparable revenue including GrandVision versus 2020 and 2019

To fully appreciate the performance of the Company resulting from the GV Acquisition, comparable revenue has been prepared for illustrative purpose only. Comparable revenue includes, for all periods presented, the contribution of GrandVision’s revenue to EssilorLuxottica as if the combination between EssilorLuxottica and GrandVision, as well as the disposals of businesses required by antitrust authorities in the context of the GV Acquisition, had occurred on January 1, 2019. As mentioned in the previous paragraph, 2020 performance was affected by the Covid-19 pandemic. Consequently, the Company’s net sales performance in 2021 is also presented compared to 2019.

Revenue by operating segment
Following EssilorLuxottica’s Annual Shareholders’ Meeting held on May 21, 2021, the appointed Chief Executive Officer (CEO) decided to review the Group’s performance from a different perspective. Moving away from the former operating segment view, which was linked to the legacy of Essilor and Luxottica, the new view considers the Group as a vertically integrated player whose performance is assessed based on its approach to the market (distribution channel approach). On one side is the supply of products and services to all third-party professionals of the eyecare industry, and on the other side, the business with a direct relationship with the end consumer. This new approach has led to the following two new operating segments Professional Solutions (“PS”): representing the wholesale business of the Group and Direct to Consumer (“DTC”): representing the retail business of the Group. This change has been retrospectively accounted for as of January 1, 2021 and all prior period segment information has been restated to conform to the new presentation.

Fourth-quarter revenue by operating segment

Professional Solutions
The Professional Solutions division includes the supply of products and services to third-party eyecare professionals, which represents the company’s wholesale business. In the fourth quarter of the year the division’s comparable revenue reached €2,678 million, up 6.8% at constant exchange rates compared with the same period of 2019 (+2.0% at current exchange rates). Performance in all regions was positive at constant exchange rates.

North America progressed nicely building on the expansion of key accounts and continuing to exploit the benefits of the EssilorLuxottica 360 initiative. EMEA consolidated its growth trajectory supported by the positive results in the key markets of Italy and the UK as well as Scandinavia and Eastern Europe. Asia-Pacific accelerated thanks to a solid performance in Mainland China and India growing double digits at constant exchange rates). Improved business conditions in Latin America led to a pronounced rebound in the region with sales up double digits at constant exchange rates. EssilorLuxottica’s flagship brands underpinned the solid growth of the quarter. Varilux, Eyezen, Crizal and Transitions all posted positive results while Stellest built up a strong momentum in its key market of China. Oakley, Ray-Ban and the luxury brands drove the performance in the frames business.

Direct to Consumer
The Direct to Consumer division includes the sale of products and services directly to end consumers, which represents the Company’s retail business, comprised of brick-and-mortar stores and e-commerce platforms. In the fourth quarter the division posted comparable revenue of €2,901 million, up 15.2% at constant exchange rates compared with the same period of 2019 (+11.6% at current exchange rates). The acceleration in the fourth quarter was led by North America, which was the best performing business for the Group in the period. Comparable revenue in both EMEA and Latin America expanded at double digits at constant exchange rates, and the Asia-Pacific region recovered nicely, driven by the key markets of Australia and New Zealand. Brick-and-mortar comparable-store sales  were positive in the mid-single digit, supported by North America up 9%, Latin America and EMEA growing double-digit and single-digit respectively, and Asia-Pacific turning positive in the quarter. The optical and sun categories both contributed to the overall performance, with the main banners – LensCrafters, Target, OPSM and Sunglass Hut – growing from high-single to double digits.

E-commerce revenue grew in excess of 60% at constant exchange rates in the quarter, over 7% of the Company’s total turnover, meaningfully accelerating compared to the third quarter. All the main platforms drove the performance, with SunglassHut.com more than doubling, Oakley.com and EyeBuyDirect.com doubling and Ray-Ban.com expanding by more than two thirds.

Full year revenue by operating segment

Professional Solutions
The Professional Solutions division posted comparable revenue of €10,399 million, up 4.9% at constant exchange rates versus 2019 (-0.6% at current exchange rates), accounting for 48% of the Company’s total turnover. All regions experienced an acceleration from the first to the second half of the year as the health crisis started to improve on the back of rising vaccination levels. North America grew high single digit at constant exchange rates and was the growth driver together with Latin America, which consistently stepped up its performance. EMEA and Asia-Pacific grew at a slightly lower pace in the low-single-digit territory. The main brands continued to perform nicely both on lenses, with Crizal, Transitions, Eyezen, Stellest, and frames, led by Oakley and the luxury brands. The optical category progressed steadily, while sun rebounded in the second half of the year.

Direct to Consumer
The Direct to Consumer division posted comparable revenue of €11,099 million, up 9.8% at constant exchange rates versus2019 (+5.5% at current exchange rates), accounting for 52% of the Company’s total turnover. After a soft start to the year, negatively impacted by Covid-19 related restrictions, the division experienced a strong recovery, growing double digits at constant exchange rates starting from the second quarter and accelerating further in the fourth quarter.

North America represented the largest and fastest growing region, while the pace in both EMEA and Latin America mirrored the progressive easing in local restrictions. Asia-Pacific was the only region not exceeding pre-pandemic levels in the year, despite Australia expanding mid-single digit at constant exchange rates. Brick-and-mortar comparable-store sales were positive in the low-single digit on a full year basis, with mid-single digit expansion in the second semester more than compensating a slightly negative first half. Pent-up demand and excellent instore execution drove the performance of the optical business particularly starting from the second quarter, while the sun category accelerated over the second semester. The e-commerce channel expanded in excess of 60% at constant exchange rates, exceeding the €1,500 million threshold in the full year and representing 7% of the Company’s total revenue.

North America
North America posted comparable revenue of €2,528 million, up 13.9% at constant exchange rates versus the fourth quarter of 2019 (+10.6% at current exchange rates), in line with the third quarter performance. The Professional Solutions division grew steadily in the quarter, driven by the expansion of the key accounts as well as the solid performance of the independent ECPs channel, also supported by the EssilorLuxottica 360 program. Third-party e-commerce gave the division a significant boost thanks to the growth of its largest hosts. The performance of the lens business was driven by the main premium brands, led by Crizal and Transit ions. The frames business was up double digits with Oakley, Ray-Ban and the luxury brands outperforming. Revenue of the brick-and-mortar retail stores continued to be strong, with comparable-store sales increasing by 9% versus the fourth quarter of 2019, driven by a favourable mix on lenses and frames. On the optical side, LensCrafters and Target progressed at high-single digit, while Sunglass Hut continued to outperform with comparable-store sales(5) up in the mid-teens. The e-commerce business increased by approximately 75% with SunglassHut.com being the best performer closely followed by EyeBuyDirect.com, Oakley.com and Ray-Ban.com. EyeMed’s revenue continued to grow at record rates, with total membership topping 65 million lives.

EMEA
EMEA recorded comparable revenue of €1,987 million, up 8.2% at constant exchange rates versus the fourth quarter of 2019 (+5.4% at current exchange rates), consistent with the third quarter performance. The Professional Solutions division consolidated the mid-single digit growth pace started in the second quarter, supported by key markets such as Italy and the UK, as well as Scandinavia and Eastern Europe. The optical category grew solidly, driven by flagship lens brands, and with independent ECPs and key accounts emerging as best performing channels. The roll-out of Stellest lenses in the region successfully continued. Sunglasses further consolidated the healthy recovery started at the end of the second quarter, with Oakley and luxury brands driving the performance. Brick-and-mortar comparable revenue grew nicely, close to double digits versus the fourth quarter of 2019. Sunglass Hut’s performance was positive in the period, materially improving in October and November, with all countries growing except for France, while temporarily weakening in December, affected by the introduction of new restrictions. In Italy, Salmoiraghi & Viganò strongly accelerated compared with the third quarter, with comparable-store sales  up in the mid-teens.

GrandVision’s business in the UK continued to grow double digits at constant exchange rate  and banners in both Germany and Northern Europe progressed nicely. In Benelux results in all chains exceeded the pre-pandemic levels. On the other hand, GrandVision’s performance in France remained in the negative territory, affected by still weak traffic during the quarter. Brick-and-mortar results in the region were also mildly helped by the Ukrainian banner Optical House, consolidated since January 2020. E-commerce revenue consistently rose double digits, with Ray-Ban.com, Oakley.com and SunglassHut.com being the best performing platforms.

Asia-Pacific
Comparable revenue in Asia-Pacific amounted to €706 million, up 1.4% at constant exchange rates versus the fourth quarter of 2019 (+2.1% at current exchange rates), showing a material improvement compared with the previous quarter thanks to the lift of Covid-19 related restrictions, particularly in Australia. The Professional Solutions division consolidated the growth trajectories started in the third quarter. Mainland China confirmed once again its relevance, driving the overall results in the region, led by premium branded lenses – Eyezen, Crizal, Varilux and Transitions. Myopia management solutions continued to show robust performances, with Stellest lenses supported by a dedicated marketing campaign and widening media coverage. Local brand Bolon expanded nicely, mainly driven by optical products. As for other markets in the region, India confirmed its double-digit growth at constant exchange rates while the performance in both Japan and Korea stabilized. Southern Asia remained in the negative territory, although improving versus the previous quarters. Performance of the brick-and-mortar business materially improved compared with the third quarter, namely in Australia where comparable-store sale at both OPSM and Sunglass Hut turned double-digit positive in November and December. In Mainland China, where the overall retail proposition is progressively evolving, results remained weak, while South-East Asia and Hong Kong continued to suffer from soft tourism flows.

Full year revenue by geographical area

North America
North America posted comparable revenue of €9,868 million, up 12.7% at constant exchange rates versus 2019 (+7.0% at current exchange rates), accounting for 46% of the Company’s total turnover. Flawless execution coupled with a buoyant macro-economic environment delivered consistent double-digit growth starting from the second quarter. Optical continued its sound trajectory while the sun category experienced a distinct come back. In Professional Solutions, results were driven by key accounts, independents as well as third-party e-commerce. The sport channel also kept performing well as a testimony of Oakley prevailing as a consistent contributor to the overall growth. The brick and mortar network posted double-digit growth versus 2019 with record comparable-store sales in Sunglass Hut and LensCrafters. E-commerce expanded by more than 75% versus 2019.

EMEA
EMEA recorded comparable revenue of €7,953 million, up 3.7% at constant exchange rates versus 2019 (+1.6% at current exchange rates), accounting for 37% of the Company’s total turnover. After a soft start to the year, the region benefited from improving health conditions during the second semester. The Professional Solutions division slightly exceeded pre pandemic levels in the full year, growing mid-single digit starting from the second quarter onwards. Italy, Scandinavia and Eastern Europe and Turkey were the best performing areas at constant exchange rates in the year.

Brick-and-mortar comparable-store sales were slightly negative on an annual basis, following a remarkable recovery during the second semester driven by the optical category. The sun business was heavily affected by restrictions in key countries as well as subdued tourism, with more encouraging trends emerging only toward the end of the third quarter.

E-commerce revenue consistently rose double digits in the year.

Asia-Pacific
Comparable revenue in Asia-Pacific amounted to €2,542 million, down 1.6% at constant exchange rates versus 2019 (-2.8% at current exchange rates), accounting for 12% of the Company’s total turnover. The region was the only one not exceeding the pre-pandemic levels on a full year basis, being heavily affected by Covid-19 related restrictions during the second and third quarters. The Professional Solutions division grew low-single digit at constant exchange rates  in the year, experiencing a nice growth trajectory throughout all quarters except for the second one, which was softened by restrictions in the Indian market. China drove the overall divisional results, representing the largest and fastest growing country in the region. The brick-and-mortar business dragged down the overall regional performance, remaining in negative territory during the entire 2021. Australia and New Zealand stood out, growing mid-single digit at constant exchange rates in the year, and only partially counterbalancing softer trends in other countries.