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EssilorLuxottica, Oakley Owner, Revenue Up 9.2% First Half 2021, Compared To 2019

EssilorLuxottica’s second quarter and first half 2021 results saw Revenue acceleration, margin expansion and record cash flow. 

Second quarter:

• Revenue +9.2% versus 2019 at constant exchange rates
• Professional Solutions and Direct to Consumer both growing and accelerating
• Optical and sun both growing, with sun catching up in pace
• E-commerce +66% versus 2019 at constant exchange rates, reaching 9% of total revenue

First half:

• Operating profit +35% versus 2019 at constant exchange rates
• Adjusted operating profit margin at 18.5%, up 130 basis points versus 2019
• Free cash flow record generation of Euro 1.2 billion

Second Quarter of the Year
The economic environment evolved reflecting the COVID-19 situation in the different regions of the world. On the recovery path, North America moved first and faster, EMEA followed more gradually and Latin America later in the quarter, while Asia-Pacific was affected by new virus outbreaks and consequent restrictions. The Company leveraged the market recovery and its leading multicategory and multichannel proposition to sharply accelerate in revenue and margins, with a sound performance in the whole first half of the year. Total revenue amounted to Euro 4,709 million, up 9.2% versus the second quarter of 2019 at constant exchange rates. North America advanced by 16.4% and EMEA by 3.8%. On top of a buoyant US, generating more than 50% of the Group’s revenue, other key markets were nicely growing and fuelling the Company’s business acceleration, namely France, Italy, UK, Mainland China, Australia and Brazil.

Optical and sun categories both progressed, broadly aligned in terms of growth pace compared to the second quarter of 2019. Optical continued to grow, representing two thirds of the Group’s business, on the back of the Company’s ability to constantly deploy innovation in lenses and instruments. Sunglasses nicely bounced back across all the channels in Professional Solutions and Direct to Consumer, catching up with the pace of optical, boosted in particular by luxury brands.

Optical and sun categories both progressed, broadly aligned in terms of growth pace compared to the second quarter of 2019. Optical continued to grow, representing two thirds of the Group’s business, on the back of the Company’s ability to constantly deploy innovation in lenses and instruments. Sunglasses nicely bounced back across all the channels in Professional Solutions and Direct to Consumer, catching up with the pace of optical, boosted in particular by luxury brands.

Brands prove to matter, with blockbusters value-added lenses (in particular Crizal, Transitions and Eyezen) driving the growth in optical and frame brands (in particular Oakley and licenses like Prada, Dolce & Gabbana and Versace, especially in North America) being a winning factor in both optical and sun.

E-commerce progressed by 66% in the quarter at constant exchange rates, reaching 9% of the Group total revenue, with broadly the same performance throughout the semester. Main platforms Ray-Ban.com, Oakley.com, SunglassHut.com and EyeBuyDirect.com all contributed, with North America as the top performing area.

Revenue growth translated into a material increase in margins, thanks to the operating leverage which typically characterizes the Company’s vertically-integrated business model, as well as the extraordinary cost containment measures put in place during COVID-19, which are set to be gradually removed as the business recovers.

In the first half of the year, the adjusted operating profit reached Euro 1,622 million, with the margin on revenue reaching 18.5%, posting 16.4% increase at constant exchange rates compared to the same period of 2019. Group adjusted net profit amounted to Euro 1,117 million, at 12.7% of revenue.

Free cash flow was Euro 1,211 million in the first six months of the year.

The closing of the GrandVision acquisition announced on 1 July marked the completion of a visionary project, that is the combination of the three global champions of the industry into one single stronger Group, with the goal of elevating the eyecare and eyewear standards and growing awareness and access to quality vision care for all consumers.

Outlook
EssilorLuxottica now expects its full year 2021 revenue to grow around mid-single digit versus 2019 at constant exchange rates, with the adjusted operating profit as a percentage of revenue at constant exchange rates higher than 2019. This assumes that no further COVID-19 related restrictions will be introduced in the second half of the year.

The new full year outlook represents an upgrade of the targets issued with the first quarter results, which pointed to revenue and adjusted operating profit margin at least at the level of 2019 at constant exchange rates.

Second-Quarter Revenue By Operating Segment

Professional Solutions
In the second quarter of the year the division’s revenue reached €2,733 million, up 5.0% at constant exchange rates1compared with the same period of 2019 significantly accelerating versus the first quarter. The Company’s ability to serve its customers with innovative solutions and engage them with dedicated partnership programs drove the divisional performance, supported by progressive re-openings in most of the areas worldwide and improving business conditions across all the main trade channels.

North America was the best performing region, up high-single digit boosted by independent ECPs and key accounts. EMEA was next turning positive thanks to key markets including France, Italy and UK,

In terms of products, optical outpaced sunglasses, which overall restarted later in the quarter, with North America accelerating. Brands proved to be a key driver, with lenses, including, Crizal, Transitions and EyeZen as well as the Blue Cut category, frames, with Oakley and main luxury brands as top performers, and the instruments business all contributing.

Direct to Consumer
The Direct to Consumer division includes the sale of products and services directly to end consumers, that is the Company’s retail business, comprised of brick-and-mortar stores and e-commerce platforms. In the second quarter the division’s revenue reached €1,975 million, up 15.7% at constant exchange rates compared with the same period of 2019 dramatically accelerating versus the first quarter. The strong performance of the division was driven by the Company’s wide-range of value-added solutions as well as the return of consumer demand in both optical and sun categories. The quarter ended with over 90% of stores open in total, just a touch above three months earlier.

In brick-and-mortar stores, comparable store sales turned positive close to mid-single digit compared to the second quarter of 2019, supported by a sharp acceleration in North America, largely offsetting the still negative EMEA. The optical and sun categories both contributed to growth, with Sunglass Hut (in North America), Target Optical and LensCrafters as the best performing banners.

Direct e-commerce revenue rose by two thirds at constant exchange rates, up to 9% of the Company’s total turnover, with North America almost doubling the business and all the main platforms growing fast (Ray-Ban.com almost doubling, Oakley.com and EyeBuyDirect.com more than doubling, SunglassHut.com tripling).

First-Half Revenue By Operating Segment

Professional Solutions
In the first half of 2021 Professional Solutions’ revenue reached €5,196 million, up 2.7% at constant exchange rates1versus the same period of 2019. The North American region grew mid-single digit at constant exchange rates, representing the growth engine of the division. Asia-Pacific and Latin America were positive, while EMEA was negative but improving during the second quarter. At the global level, the optical category continued to outpace sunglasses, thanks to the main lens brands such as, Crizal, Transitions, EyeZen, and Stellest as well as the Blue Cut category and the instruments business. The sun category showed renewed vigour towards the end of the semester, in particular thanks to the North American performance.

Direct to Consumer
In the first half of 2021 Direct to Consumer’s revenue reached €3,572 million, up 10.4% at constant exchange rates versus the same period of 2019. In brick-and-mortar stores, comparable store sales were flat, thanks to a nice recovery in both the optical and sun categories started in March. The North American business led the performance, with LensCrafters, Target Optical and Sunglass Hut all positive in the semester and accelerating during the second quarter. E-commerce jumped by more than 60% at constant exchange rates in the period, accounting for 8% of total revenue, driven by all the main platforms.

Second-Quarter Revenue For North America & EMEA

North America
North America posted revenue of €2,610 million, up 16.4% at constant exchange rates compared to the second quarter of 2019 being the best performing region and generating 55% of its total turnover.

In Professional Solutions, both lenses and frames were boosted by independent ECPs, supported by dedicated partnership programs (like Essilor Expert, STARS and EL 360), as well as key accounts, overall up double digit. The Company gained market share in the wholesale channel, with all its flagship brands supporting the performance, including, Crizal, Transitions and EyeZen in lenses and Ray-Ban, Oakley, Costa and luxury licenses in frames and sunglasses (including AFA).

Revenue of brick-and-mortar banners sharply accelerated, with comparable store sales up 11% versus 2019 and sun slightly out  pacing optical, as a sign of restoring consumer confidence and some revenge purchasing effect. LensCrafters and Target Optical were up low-to-mid teens and Sunglass Hut mid teens, led by higher volumes and average selling prices. EyeMed revenue progressed by more than one third, with further market share gains and lives exceeding 60 million. E-commerce revenue almost doubled, thanks to all the main platforms, Ray-Ban.com, Oakley.com, SunglassHut.com and EyeBuyDirect.com.

EMEA
Revenue in EMEA amounted to €1,268 million, up 3.8% at constant exchange rates versus the second quarter of 2019 gaining momentum in June, which grew double digit supported by the progressive easing of restrictions across the region. The Professional Solutions division turned positive in the quarter, driven by key markets of France, Italy and UK, followed by Northern and Eastern Europe. The optical category drove the performance, thanks to the acceleration of Crizal, Eyezen and Transitions lenses and the strong momentum of the instruments business, while the roll out of Ray-Ban Authentic and the launch of Stellest in France and Italy in June both recorded promising results. Since June sunglasses materially accelerated, helped by third-party e-commerce platforms like Mister Spex, Zalando and Asos. The brick-and-mortar business remained negative in comparable store sales versus 2019. Sunglass Hut continued to be affected by restrictions in key countries as well as subdued tourism (impacting around one fourth of the store base in the region), although to a lesser extent than in the first quarter. UK and Turkey were double digit positive, while the other countries improved but closed negative. In Italy, Salmoiraghi & Viganò started recovering from mid-May following the easing of restrictions. E-commerce revenue rose double digit, with Ray-Ban.com, Oakley.com, SunglassHut.com and EyeBuyDirect.com all contributing, mitigated by subdued performance of contact lenses.

First-Half Revenue For North America & EMEA

North America
North America posted revenue of €4,810 million, up 11.6% at constant exchange rates compared to the first half of 2019. The region drove the overall Group performance over the entire semester, growing in both the Professional Solutions and Direct to Consumer divisions. The rapidly restoring economic environment led to an acceleration in March, which consolidated in the second quarter in both optical and sun categories. Over the entire period, independent ECPs and key accounts were the best performing channels in Professional Solutions. Both brick-and-mortar stores and e-commerce posted double digit growth in the period, with improvements at LensCrafters and Sunglass Hut brick-and-mortar stores starting from March.

EMEA
EMEA posted revenue of €2,290 million, down 1.3% at constant exchange rates compared to the first half of 2019. The first part of the year was heavily affected by restrictions in most of the European countries, while the progressive easing of limitations drove a gradual recovery in the second quarter, which closed positive in both Professional Solutions and Direct to Consumer divisions, with an acceleration in June. The main markets of the region were slightly negative in the six months, while Northern Europe, Russia and Turkey were the best performers.

Creation of an innovation centre in France dedicated to smart eyewear
On July 12, EssilorLuxottica announced the creation of a dedicated innovation centre in France to reinforce its expertise and expand its capabilities in electrochromic and smart eyewear technologies. the Company intends to accelerate its initiatives to address consumers’ evolving needs and fully capture the potential of this fast-growing wearables segment. Located within the Company’s industrial facility in Dijon, France, the newly created Smart Eyewear Technologies Center will coordinate the relevant R&D and industrialization sites, based in Toulouse and Créteil (France), and collaborate closely with the R&D teams based in Agordo (Italy). Bringing together more than 50 leading experts, the Center will enable EssilorLuxottica to cover the entire value chain, from upstream research to production.

Read full statement here.