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EssilorLuxottica 2021 Q1 Revenue Shows Solid Return To Growth

Today, EssilorLuxottica announced that consolidated revenue for the first quarter of 2021 totalled Euro 4,060 million, representing a year-on-year increase of 7.3% compared to the first quarter of 2020 (+14.3% at constant exchange rates¹). Consolidated revenue grew by 1.9% at constant exchange rates¹ compared to the first quarter of 2019.

• Revenue above 2019 level¹ despite COVID-19 pandemic, up 2% at constant exchange rates¹ 
• Strong momentum in prescription lenses and optical retail
• E-commerce up 61% versus 2019 at constant exchange rates¹
• North America, China and Australia driving the performance
• Strong balance sheet and free cash flow⁵ generation

CEO Francesco Milleri and Deputy CEO Paul du Saillant commented:

“EssilorLuxottica had a strong start to the year. 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. Our passionate employees were not deterred by the adversity – they remained agile and focused on improving the unique journey taken by our customers and consumers. In the first quarter, we successfully capitalized on the rebound in the US and China, while leveraging our brands, product innovation, distribution and digitalization everywhere in the world. Our integration gained further momentum and we made good progress in several areas, while continuing to make new bolt-on acquisitions.  Our sustainability, social impact and inclusive business agendas remained at the heart of our mission and business model. The position we’re in today gives us greater confidence in our ability to outperform the industry.”

Operational and financial highlights
Revenue grew at constant exchange rates1, both compared to the first quarter of 2020 (+14.3%) and of 2019 (+1.9%). Momentum accelerated towards the end of the quarter.

First quarter revenue also improved sequentially compared to the growth of 1.7% at constant exchange rates1 achieved in the fourth quarter of 2020.

By activities, the optical business, which accounts for around 75% of revenue, continued to drive the performance with sound prescription sales and optical retail. Sun demand bounced back in North America, with Sunglass Hut posting double digit comparable store sales3 in March compared to 2019.

E-commerce was up 61% versus 2019 (and +47% versus 2020) at constant exchange rates1, with the proprietary mono-brand platforms as a whole doubling in revenue.

By geography, North America showed strong signs of demand recovery, visible across all of the Company’s channels. Greater China, now EssilorLuxottica’s second biggest market in revenue, and Australia materially contributed to growth. Europe and most developing markets7 lagged behind, due to new restrictions related to the COVID-19 pandemic.

EssilorLuxottica signed several bolt-on acquisitions during the quarter. On February 3, 2021, it announced that it had entered into an agreement with CooperCompanies to create a 50/50 joint venture for the acquisition of SightGlass Vision, a US based life sciences company focused on developing innovative spectacle lenses to reduce the progression of myopia in children. And on March 25, 2021, it announced that it had entered into an agreement to acquire US based lab network Walman, which has 35 facilities across the US, including prescription lens-finishing labs and hubs for optical instruments and other vision care products.

EssilorLuxottica ended the quarter with Euro 9.3 billion in cash and short-term investments and a net debt6 of Euro 2.6 billion (including leases liabilities).

Sunglasses & Readers
Sunglasses & Readers revenue was down 0.3% compared to the first quarter of 2019 (+3.4% at constant exchange rates1). Xiamen Yarui Optical posted very strong growth at Bolon and Molsion, driven by the optical business and by retail, with both new store openings and solid e-commerce activity thanks to new brand ambassadors. FGX benefitted from good momentum in its Readers optical activity, e-commerce growth and favorable shipment timing. MJS revenue declined compared to 2019 mainly due to the downsizing of its franchisee network, while comparable store sales3 continued to improve in its direct stores.

Wholesale
The Wholesale division posted revenue down 10.5% compared with the first quarter of 2019 (-4.7% at constant exchange rates1). The sun category remained soft whilst optical consolidated the growth trajectory started in the third quarter of 2020. In terms of geographies, North America remained the main driver and experienced a sequential acceleration compared with the fourth quarter of 2020, up high single digit in the period at constant exchange rates1 compared with the first quarter of 2019. Conversely, Europe decelerated, with new restrictions affecting the performance of the sun category in particular. Among developing countries7, Brazil weakened toward the end of the period suffering from renewed impacts of COVID-19. As for eyewear brands, Oakley stood out again as one of the best performers.

Retail
The Retail business was down 1.1% in revenue compared to the first quarter of 2019, but up 4.0% at constant exchange rates1. While new restrictions caused additional store closures in specific areas and periods compared with the end of 2020 (in particular in Brazil and Europe in March), the Company kept opened slightly more than 90% of its total 6,736 owned locations worldwide throughout the entire quarter. Adjusted comparable store sales4 were flat compared to the first quarter of 2019, after a marked recovery in March mostly driven by North America. Direct e-commerce continued to grow fast at constant exchange rates1 up 124% versus the first quarter of 2019 and 100% versus the same period of 2020. Among regions, in North America the division was up high single digit compared with the first quarter of 2019 at constant exchange rates1, boosted by buoyant consumer demand not only in optical but also in the revamped sun business. Asia was slightly positive thanks to the Australian optical and sun categories more than offsetting the negative performance in the rest of the region. Europe and Latin America were dragged down by new restrictions. 

Europe
Revenue in Europe decreased by 9.6% compared to the first quarter of 2019 (-7.3% at constant exchange rates1). Sunglasses & Readers revenue was significantly down at constant exchange rates1 compared to 2019, 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.

The Wholesale division continued to be affected by restrictions in most European countries, with softness persisting in particular in Spain, France and Italy. Conversely, Northern Europe offered more reassuring trends compared with the first quarter of 2019. The STARS program was markedly positive, outpacing the rest of the business in the region.

In Retail, Europe remained the only region in negative territory (at constant exchange rates1 compared with the first quarter of 2019), and showed a deceleration compared with the second half of 2020. New restrictions in key countries, as well as still subdued tourism particularly affected Sunglass Hut. Quarterly performance at Salmoiraghi & Viganò was impacted by new restrictions to mobility and limitations to stores opening over the weekends. In a challenging business environment, e-commerce performance stood out with growth over 200% compared to the first quarter of 2019.

Outlook
EssilorLuxottica confirmed its confidence in its ability to outperform the eyecare and eyewear industry in 2021, thanks to continued innovation in products and processes and ongoing evolution of the consumer journey. The Company now has the ambition to deliver a performance that is at least comparable to 2019 in both revenue and adjusted2 operating profit margin, at constant exchange rates1.