MILAN — Luxottica SpA had rising profits and sales in the fourth quarter and issued an upbeat forecast for the current year, citing increasing demand for high-end fashion eyewear, particularly in the U.S. and developing markets like China.
Net profits for the three months ended Dec. 31 rose 11.8 percent, to 95.7 million euros, or $123.4 million, while sales for the period grew 7.3 percent, to 1.11 billion euros, or $1.43 billion. Revenues would have grown 13.9 percent at constant exchange rates. Operating profit advanced 27.6 percent, to 164.9 million euros, or $212.8 million.
Dollar figures have been converted from the euro at average exchange rates for the period to which they refer.
Luxottica’s sale of the gift store chain Things Remembered in September bit into profit and revenue growth for the quarter. The company said that excluding results of Things Remembered, fourth-quarter profits would have advanced 32.4 percent.
For the full year, Luxottica’s net profits rose 24 percent, to 424.3 million euros, or $534.6 million, while sales advanced 13.1 percent, to 4.68 billion euros, or $5.99 billion.
Luxottica said 2007 earnings per share on a constant currency basis should grow 16 percent to 18 percent, and sales should rise 8 percent to 10 percent. The sales target reflects a slowdown from the growth posted in 2006, but Luxottica chief executive officer Andrea Guerra stressed he was just trying to be cautious.
“We continue to think that 2007 will be an important year for Luxottica,” Guerra said at a press conference here. “When you give targets, you should be relatively confident that you are going to meet them.”
Nonetheless, investors weren’t impressed. Luxottica’s shares in Milan slid 3.1 percent, to close at 23.20 euros, or $30.39, on Tuesday.
Citing top-performing brands like Prada, Bulgari, Polo Ralph Lauren and wholly owned Ray-Ban, Guerra said that overall outlook for the eyewear market looked buoyant. The ceo noted strong demand in emerging markets like Mexico, China and the Middle East. He also talked about a shift in the U.S. away from casual and sportier models to fashion-branded eyewear and highlighted the importance of aging Baby Boomers’ spending power.
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“This is not the post-war generation, but rather people with a tendency to spend more,” Guerra said.
Luxottica also stands to benefit as it revamps its retail network. The company plans to invest 225 million euros, or $294.8 million, this year in store restylings and openings. Luxottica is renovating its Sunglass Hut retail chain to a new high-end concept featuring gold interiors and mosaic walls. The group also is giving its LensCrafters stores a facelift in 2007.