PARIS, France—EssilorLuxottica announced revenue growth of 5.2 percent for the second quarter of 2024 at constant exchange rate and 5.3 percent for the first half of the year. The company also reported expanding margins and the acquisitions of diagnostic med-tech platform Heidelberg Engineering and iconic Supreme brand, as reported in VMAIL, which were announced on July 17, 2024. Francesco Milleri, chairman and CEO, and Paul du Saillant, deputy CEO at EssilorLuxottica commented, “In the first half of the year, EssilorLuxottica’s strategy continued to pay off with all regions and businesses contributing to positive results. With top line growth, margin expansion and record cash flow, the last six months further solidified our long-term outlook, made possible thanks to the unique talent and engagement of our 200,000 colleagues worldwide.”
 
The company also confirmed 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 percent to 20 percent by the end of that period.

Revenue for North America in the first half of 2024 was €5,973 million and €3,098 million for the second quarter. 

The execs said, “Today, our commitment to the two strategic pillars of med-tech and smart eyewear is taking shape, with Stellest seeing exponential growth, the success of Ray-Ban Meta and Nuance Audio set to establish a new category in the market. Announced just last week, the acquisition of Heidelberg Engineering will give us a new foothold in the clinical ophthalmology space.

“The third strategic pillar, our iconic brands, will make the first two more accessible, consumer-friendly and relevant. With new collections coming from all our house and licensed brands, including our firstever for Moncler, and the announced acquisition of Supreme, we are exactly what we need to be: a tech-driven and brand-rich company caring for and connecting with hundreds of millions of people globally.”

In a subsequent call with financial analysts, Milleri added several comments illuminating the Group’s strategies and view towards the future.

Milleri told analysts, “While we will execute our strategy in the core business of eyecare and eyewear, we play the role of a frontrunner in the technological revolution of the industry. The combination of Essilor, Luxottica and Grandvision into one single, stronger group, was just the first step. Now we are at work to make a second, much bolder move, bringing our group into the promising future of wearable and AI-based face computing, bringing together digital platforms, a portfolio ranging from eyecare, hearing aids, predictive advanced diagnostics, myopia to gaming, sport and entertainment.”

He noted, “In that direction, Ray-Ban Meta continue to be a great success. At the start of this journey, Ray-Ban Meta already sold more than Ray-Ban Stories in its entire first two years. We strongly believe we are just at the beginning of a revolution which will combine technology with design and branding and deeply reshape many industries converging on our wearable unit platform. 

“One of the key engines of such a revolution is our long-term partnership with Meta, making our new proposition of a new generation of eyewear, more and more powerful. Nuance Audio is part of the same vision. Over the past year we’ve made significant progress in developing this new technology, fine tuning the product and getting supportive clinical evidence from extensive research and top quality tests. At the launch we will be ready with  presentation tools and store product corners to support the sales of Nuance Audio in third party optical and audiology locations, together with our own stores. Based on the high technology of our product we have decided to proceed on the submission to the FDA in order to ensure that our product meets the highest standard of safety and efficacy. Being fully respectful of FDA procedure, we still target the end of the year for the launch of Nuance Audio in the U.S. market.”

Regarding the two acquisitions announced last week, the leading diagnostic med tech platform, Heidelberg Engineering, in Germany and the iconic Supreme brand from the U.S., Milleri emphasized that these “are fully in line with our strategy as they bring to EssilorLuxottica strong applications in capabilities in ophthalmic applications and one of the most iconic brands among youth.”

He said, “Supreme, started in 1994 in New York City, is really a leading iconic brand, the most authentic and desired by the new generations, a business fully direct to consumer. This community is loyal to the brand, thus offering EssilorLuxottica access to an audience that is untapped by its current brand portfolio. Well beyond its strong position in apparel, we are acquiring in Supreme a unique communication platform to address young consumers. Its stores offering a unique retail experience which are part of such an identify. Supreme directly operates 17 well performing stores worldwide. In a much more fluid landscape, with different businesses in industry converging and mixing with each other, brands will matter even more than ever. We see brands as the necessary support for the diffusion of innovations in wearable and digital platforms, the necessary cultural harbinger to push our disruptive view of the future.”

In response to questions from analysts about the current Meta partnership, other reports of Google exploring smart eyewear partnerships and the Meta company potentially investing in the EssilorLuxottica Group, Milleri also said, “In terms of the Meta partnership, we are convinced that it is the right one, we see very consistent results, we don’t see any reason why we have to change. At the same time, we are very proud that we do see interest coming from Google but also from other big tech for our company to start partnerships or to understand if we can share our capabilities, not only because we are good to design beautiful eyewear and frames. But because we really show we can bring into the market innovation in the right way. So we are listing to everyone. But, I repeat: we are so happy with our partnership with Meta, so this is our main target and commitment.”

Milleri noted, in response to an analyst’s question, “As far as Meta potentially taking a stake in the company, we are informed of this kind of intention, we welcome any kind of investors in our company. Also in this case, we are proud that the company that knows us very well now, after years of partnership, is convinced that our group can grow in the future and that is a way that the partnership can be reinforced. We don’t see any risk about that. If they go ahead with that it would be good, it would work, but it’s not really necessary to our partnership which is already strong.”

In the second quarter of the year, EssilorLuxottica confirmed the sound growth pace of the business it recorded in the first quarter. The group’s revenue rose 5.2 percent at constant exchange rates (+3.8 percent at current exchange rates) to €6,955 million, on top of a strong performance in the same period of last year (+8.0 percent). In the first half of the year, the group’s revenue grew by 5.3 percent at constant exchange rates (+3.4 percent at current exchange rates) to €13,290 million, in line with the long-term targets. The second quarter revenue performance was in continuity with the first quarter trends also in terms of the key growth drivers. The growth was balanced across the regions, categories and channels, the company said.

Geographically, all the regions rose high-single digit in the period, with the exception of slower North America. EMEA stood out again as the most powerful growth engine for the group, with both the channels contributing and optical retail comparable-store sales up double digits, also in part to the rising penetration of the subscription model. North America continued to be low-single-digit positive, held back by still negative comparable-store sales at Sunglass Hut and negative trends with the ECPs not engaged in partner programs.

In Asia-Pacific, Professional Solutions and Direct to Consumer equally contributed to the solid sales performance, with Stellest and the myopia management portfolio being the major driver. Latin America sound growth was based on slightly positive Brazil and Mexico and hyperinflationary Argentina.

Price-mix played a key role in the second quarter of the year to sustain revenue growth, according to the company, as the group continued to deploy innovation in lenses and frames and leverage the mix as a driver, and at the same time implemented a single-digit increase to its price lists across the board.

The top line growth was well balanced also in terms of product categories, with vision care and sunglasses growing broadly at the same pace. As for the brands, in lenses Stellest led the way above 80 percent, the group said, while Varilux and Transitions progressed at mid-single digit pace. In frames, Ray-Ban posted a healthy high-single-digit growth driven by both traditional eyewear and smart glasses, while in license portfolio Prada was the best performing name, up in the high teens.

In terms of profitability, despite the persistence of a material inflation drag the group managed to restart its margin expansion journey, consistent with its long-term targets. The adjusted gross profit amounted to €8,541 million in the first semester, reaching 64.3 percent of revenue, 20 basis points higher than H1 2023 (or +40 basis points at constant exchange rates). 

The adjusted operating profit reached €2,431 million in the first half, representing 18.3 percent of revenue, unchanged versus H1 2023, while at constant exchange rates1 the margin expanded by 50 basis points to 18.8 percent of revenue. 

The adjusted group net profit amounted to €1,746 million in the first half, representing 13.1 percent of revenue, compared with 12.9 percent in H1 2023, a margin accretion of 20 basis points, while at constant exchange rates the margin expanded by 60 basis points. 

Free cash flow amounted to €971 million in the first six months of the year, compared to €954 million in the same period of last year. The group ended the six months with €2.16 billion in cash and cash equivalents and a net debt of €9.76 billion (including €3.51 billion lease liabilities).

As of June 30, 2024, EssilorLuxottica reported a total worldwide store count of 17,676, including 3,835 in North America.