Luxottica to keep with M&A path in 2012
MILAN (Reuters) - Italy's Luxottica, the world's biggest premium eyewear maker, is looking to new acquisitions in fast-growing Latin America next year, as it moves to shield its business from a slowdown in debt-hit mature economies.
The owner of Ray-Ban and Oakley brands said on Monday it looked to a positive rest of the year, after strong sales of its high-end sunglasses from Brazil to China offset the impact of a weak dollar and financial market turbulence.
The maker of sunglasses for top brands such as Tiffany (TIF.N) and Prada (1913.HK) posted a 4 percent rise in third-quarter net sales to 1.524 billion euros ($2.118 billion).
Sales would have risen 10 percent without the impact of a weak dollar against the euro.
"Today, there are increased uncertainties generally in international markets, but we believe there are still significant opportunities for growth," Chief Executive Andrea Guerra said in the results' statement.
"We strongly believe that our profile and results provide an excellent basis for us to look with confidence to the future and the last quarter of the year," the CEO said.
Third-quarter net profit rose 9.1 percent to 111.2 million euros. Both sales and profits came at the high end of a forecast range by analysts polled by Reuters I/B/E/S, echoing strong results at luxury makers LVMH (LVMH.PA) and Burberry (BRBY.L).
In western Europe, sales rose around 7 percent in the first nine months of the year, Guerra said, citing a good performance across all markets. Nine-month sales were up 5.9 percent at current exchange rates to 4.7 billion euros.
Luxottica is boosting its presence in Latin America, a key retail market. This year, it completed the acquisition of optical retailer Multiopticas International for a total investment of 140 million euros. It also bought two smaller Mexican chains and entered the Israeli market.
"We will keep up with our pace of small and medium acquisitions," Guerra told Reuters, confirming Latin America as one of the group's main target markets.
IN TALKS WITH ARMANI
Guerra said 2012 could be a challenging year for those luxury players which, unlike Luxottica, have not invested in emerging countries and long-term projects.
"It will not be a year of growth for everybody," he said.
Consultancy Bain & Co expects growth for the resilient luxury industry in 2011 to be stronger than it was in spring.
The luxury market is normally the last sector to enter recession and the first to rebound, but analysts say it would not be immune from any re-run of the 2008-9 economic crisis.
The eyewear market could add more than 2 billion of new customers in the next few years, the CEO said.
Guerra said the key U.S. market, where Luxottica is also listed, was in "great shape." In China, Luxottica expects to open between 60 to 70 new stores in 2012 after 60 new openings this year.
Guerra confirmed his indications in March that profits could grow twice as fast as sales in 2011 if revenues grow high-single digit, in line with last year.
A big boost for Luxottica could come from a license deal with top luxury group Giorgio Armani if the Italian fashion designer opts for its former partner when his contract with rival eyewear maker Safilo (SFLG.MI) expires next year.
"Yes, we are in talks with Armani," Guerra said.
Safilo has said it is confident of renewing the license after making a "compelling" proposal and that a decision by Armani may come by the end of this year.
Shares in Luxottica closed flat at 21.39 euros on Monday, underperforming Milan's blue-chip index .FTMIB, which closed up 0.7 percent.
(Reporting by Antonella Ciancio and Sabina Suzzi; Editing by Stephen Jewkes)
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