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CLASS

EssilorLuxottica issues warning on revenues due to COVID-19

April 01, 2020


Abstract : The group has issued a warning on revenues in the light of the health emergency evolution caused by the coronavirus. However, the e-commerce is growing.

MILAN, Mar. 27 (Class Editori) - China is granting continuity to EssilorLuxottica, together with the networks of plants and labs which are connected worldwide. The production factories have temporarily suspended their activities in Italy and in other smaller sites, but the activities in China have resumed at full speed, with enough inventories, as the group active in the eyewear industry, created by the merger between the Italian Luxottica and the French Essilor, has underlined.

However, the group has released the 2020 outlook and issued a warning on revenues, in the light of the health emergency evolution, caused by the coronavirus. The financial guidance of last year amounted at + 3/5% in terms of sales at constant exchange rates, which only mirrored the impact of COVID-19 recorded in China and in other markets, particularly located in Southeast Asia. According to Equita, the targets 2020 would be at risk; for this reason, already on last March 9, SIM included in its projections a revenue growth scenario amounting at 0% and, as a consequence, a drop in earnings, with a demand recovery expected for 2021.

“The eyewear industry, in particular that of lenses, is an extremely resistant sector: if your eyesight changes, you need new glasses”, as the executive vice-chairman, Hubert Sagnieres, has explained to the French TV BMF Business, by adding that the group’s activities are strongly linked with the stores reopening in countries such as Italy, Spain and France, where resellers had to close whilst governments were trying to contain the epidemic.

E-commerce activities are growing and there are no back orders, whilst stores in Europe and North America are respecting the temporary closing measures that the local governments have implemented; in the meantime, the e-commerce platforms of the company are going on working all over the world.

Sagnieres has also guaranteed that EssilorLuxottica has a strong liquidity position, after having started the year holding about €6 billion. The group might obtain other €4 billion, if necessary, as Sagnieres has explained, by specifying that EssilorLuxottica has not taken a decision about the share of profits yet. Many French companies are coping with pressures by trade unions, in order to quit paying the coupons to the shareholders during the coronavirus crisis.

According to Equita, China is one of the main productive centres of glasses frames for the group (about 40% of production) as well as for the whole industry; it has also added that Luxottica owns low cost production capacity in Brazil; however, it is not a comparable capacity (the SIM estimates less than 10%). The rest of the productive capacity is mainly located in Italy.

It should be noted that China has represented the real balance for the successful outcome of the union between Essilor and Luxottica, officially celebrated last year in October. This operation has allowed to create the absolute world leader in the eyewear’s field.

In addition, among the several conditions precedent provided under the contracts, which have linked the French giant of lenses with the group of glasses frames founded by Leonardo Del Vecchio in Italy at the end of 1990, the green light by Beijing regulators stood for the crucial one and it has chronologically been the last to disappear, in July 2018

(Source:Class Editori)

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