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Profitability

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Luxottica Group is a world leader in eyewear. They stock premium fashion, luxury and sports eyewear around Asia, North America, Asia-Pacific, Europe and South Africa. They make quality sunglasses and prescription frames with brands such as Oakley, Persol and Ray-Ban as well as branded sunglasses (Luxottica Group). The paper will discuss about the history of Luxottica while emphasizing on its recent performance.

History

Luxottica Group was founded in 1961 by Leonardo Del Vecchio in the town of Agordo, Italy. In 1974, Leonardo acquired Scarrone which was a distribution company. The company set up its international subsidiary in Germany in 1981, opening the door to other expansions later. In 1990 the company appeared on the NYSE’s list and later in Milan in 2000. This influenced the raising of the company’s shares and allowed it to acquire more companies like Vogue in 1990, Persol in 1995, Ray-Ban in 1999, Sunglasses Inc. in 2001, OPSM (a Sydney based company) in 2003 and Pearle vision in 2004. In 2007 it acquired Oakley for $2.1 billion and in 2011 Erroca for €20 million (known now as Luxottica Group).

Significant events during the year 2010

The company stated in its report that  total net sales for 2010  grew by 13.8 percent which is € 5.8 billion in figures. This was the greatest achievemnet for Luxottica as the previous year the company had a record of €5.1 billion. The company’s operating performance of the last year confirmed its successful strategy of increasing the profits. The adjusted EBITDA for 2010 showed the growth by 20.7 percent - up to Euro 1,034.2 million from 2009.  In addition, during  the last quarter of 2010  the adjusted EBITDA  grew by 32.7 percent from the same period of the previous year. Adjusted income growth from operations for 2010 amounted to Euro 732.6 million which was up to 28.3 percent from the previous year. The income from the wholesale segment operations amounted to Euro 461.9 million,that is 29.7 percent over 2009 while the retail segment recorded an increase of 17.6 percent to reach 424.4 million euros. Adjusted net income of the company’s shareholders raised to Euro 402.7 million (+34.6 percent from the previous year).

Financial Results

Luxottica is a global leader in design and manufacturers of luxury and sport eyewear with a strong presence in the globe and approximately with 60,000 employees. The company’s net sales reached to Euro 5.8 million in 2010. Its financial results are usually reported in Euros. The company’s business has grown steadily due to the recent many acquisitions and expansions.

Net Sales: raised by Euro 707.7 million (13.8 percent) to Euro 5.798 million in 2010. This happened due to increased sales in wholesale distribution and manufacturing segment. The growth was also attributed to strengthening of the dollar against the euro.

Cost of Sales: COS increased by 12.9 percent to 1.99 million in 2010 from 1.762 recorded in 2009, this was in line with the increase of net sales over the same period.

Gross Profit: gross profit increased by Euro 476.1 million (14.3 percent)  to Euro 3.807 billion in 2010. As a percentage of net sales, gross income was 65.7 percent in 2010 comparing to 65.4 percent in 2009.

Operating expenses: total operating expenses raised by 12.1 percent (335.0 million) to Euro 3.095 billion in 2010 and to Euro 2.761 in 2009. Taking into consideration the increasing of the net sales, it is obviuos that as a percentage the operating expenses decreased to 53.4 percent in 2010 comparing to 54.2 in 2009. 

Net Income: net income grew by 30.3 percent in 2010 to Euro 140.9 million, this was due to increased sales in 2010. This increased basic earnings per share to 0.83 in 2010 from 0.65 in 2009.

In general, the company increased its net sales as well as net income for the year 2010 as compared to 2009 or the previous years.

 

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