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EssilorLuxottica Report Full Year 2021 Revenue Up 40% Compared to 2020

EssilorLuxottica’s fourth-quarter and full-year 2021 results; business accelerated in Q4, with the Group targeting a 19-20% margin in 2026.

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 Euro 1.5 billion in FY, +62% versus 2019 in both Q4 and FY
Adjusted operating profit as a percentage of revenue at 16.1% in FY
Free cash flow at Euro 2.8 billion

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, “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 are 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.”

Because of the acquisition of GrandVision, the Company’s performance in 2021 includes GrandVision’s results only of the second half of the year therefore affecting the comparability versus prior periods. Accordingly, management deemed relevant to present the performance of the Company on a pro forma basis as well as excluding GrandVision contribution (see table below).

EssilorLuxottica FY 2021 excluding Grandvision

Highlights and comments for the fourth quarter and full year 2021 are provided versus the same periods of 2019. The comparison with the performance of 2020 is presented in the excerpt from the Management Report attached to this press release, which also includes measures directly stemming from the IFRS consolidated financial statements, i.e. Group revenue of Euro 19,820 million and an operating profit of Euro 2,326 million

North and Latin America led the way, growing by 13.9% and 25.1% respectively. The US, the Company’s biggest market, once again registered strong results and Brazil accelerated nicely into the double-digit territory. EMEA, which now represents 37% of total revenue due to the consolidation of GrandVision, advanced by 8.2% with the UK and Italy at the forefront, while France deteriorated slightly in the second half of the year, with the footfall still below normal levels. Asia-Pacific crossed into positive territory with sales increasing by 1.4%, thanks to the recovery of Australia lifting COVID-19-related restrictions and a solid Mainland China.

The acquisition of GrandVision aligned the weight of the two divisions of the Company with both now representing roughly 50% of revenue. During the fourth quarter, the Direct to Consumer grew by 15.2% at constant exchange rates, its best quarter of the year, outpacing Professional Solutions, which progressed steadily at 6.8%.

Thanks to GrandVision, the optical category gained additional importance and now represents approximately 75% of the Group’s revenue. It continued on its sound growth journey with a visible acceleration in sales of prescription lenses compared to the first half of the year. The sun category had a very strong quarter outpacing the growth of the optical category for the first time since the beginning of the COVID-19 crisis.

Brands were at the heart of the Group’s performance with strong results in value-added lenses, Crizal, Transitions, Eyezen and Varilux as well as Stellest growing progressively in its key market of China. In the frames business, Oakley, Ray-Ban and the luxury licensed brands proved to be the key to success.

The e-commerce channel expanded by 62% at constant exchange rates, slightly exceeding the Euro 1,500 million threshold in the full year and representing 7% of the Company’s total revenue. All the main platforms – Ray-Ban.com, Oakley.com, SunglassHut.com and EyeBuyDirect.com – drove the performance.

During 2021, EssilorLuxottica continued to bring new innovations to the market, with ground-breaking products such as Ray-Ban Stories, along with cutting-edge vision correction and protection solutions.

Among key newness in optical, the Stellest lenses, rolled out to France and Italy, stood out as an excellent solution for slowing the progression of myopia in children. The launch of Transitions XTRActive new generation and polarized lenses and Vision-S 700, the state-of-the-art immersive refraction station, showed further strength in the Company’s innovation pipeline.

The Company was able to translate the revenue growth into substantial margin expansion, leveraging on its vertically integrated business model and deploying effective cost control measures especially on the selling and general and administrative side. In the second part of the year, the Company released some important investments focused on the digitalization of the business, growing the awareness of its flagship brands as well as supporting its new initiatives, such as Ray-Ban Stories.

Excluding GrandVision, the Group posted an adjusted operating profit of Euro 3,027 million in the full year, representing 17.5% of revenue at constant exchange rates compared to 16.2% in 2019, an increase of approximately 130 basis points – above the guidance, based on a revenue growth in line with the targets. The Group’s adjusted operating profit amounted to Euro 3,471 million in the full year, representing 16.1% of revenue. Excluding GrandVision, the Group adjusted net profit significantly increased by 16.1% at constant exchange rates compared to 2019 (+6.3% at current exchange rates). On a pro forma basis, the Group adjusted net profit amounted to Euro 2,319 million in the full year, accounting for 10.8% of revenue

EssilorLuxottica recorded strong cash generation, with the consolidated free cash flow reaching Euro 2.8 billion in the full year (including the contribution of GrandVision in the second half of the year). The Company ended the year with Euro 3.3 billion in cash and cash equivalents and a net debt of Euro 9.7 billion (including lease liabilities) compared to a net debt of Euro 3.0 billion at the end of 2020. In addition, the Company has undrawn committed credit facilities of Euro 2.8 billion as of December 31, 2021.

Long-Term Outlook
The Company confirms its target of mid-single-digit annual revenue growth from 2022 to 2026 (at constant exchange rates) and expects to achieve an adjusted operating profit as a percentage of revenue in the range of 19-20% at the end of the period.

Strong recovery in 2021
The fourth quarter represented the culmination of the Company’s extraordinary recovery in 2021, where each quarter beat the previous one in terms of comparable revenue growth. Rising COVID-19 vaccination levels, the underlying favorable macro-economic environment and the Company’s focus on a smooth execution of its value proposition in both channels underpinned the rampant growth trajectory. A slight headwind from the Omicron variant in December did not alter the positive results.

Detailed information on the Company performance in 2021 is provided in the dedicated paragraphs

EMEA Full year revenue
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 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

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.

EMEA Fourth-quarter revenue
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 perfomance 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 rates, 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.