Essilux beats market expectations, with revenue up 7.2 per cent for the quarter

In the third quarter, EssilorLuxottica reported a 7.2 per cent increase in revenue at constant exchange rates, exceeding market expectations, and revealed figures for the smart glasses market for the first time.

More specifically, EssilorLuxottica has disclosed the exact figure for revenue generated by its wearables business, which also includes Nuance hearing aids: sales reached €486 million ($546 million) in the third quarter. In this regard, the group has recorded a slowdown in sales of this product category, which, whilst having increased significantly by 20 per cent, are being compared with a growth rate of nearly 100 per cent recorded in the April–June period. According to the company, this is a natural slowdown in growth, partly due to the difficult year-on-year comparison with the previous year, when sales had benefited from the gradual establishment of these glasses on the market.

However, the share of revenue accounted for by smart glasses remains modest, at around 6.5 per cent of total revenue. Total revenue for the quarter stood at €7.49 billion, exceeding the €7.36 billion forecast by the consensus of analysts.

Against this backdrop, North America – the group’s main market – continues to grow: sales rose by 4.7 per cent during the quarter, whilst revenue in the Asia-Pacific region recorded double-digit growth, driven by the portfolio of products dedicated to the management of myopia. “Quarter after quarter, we continue to demonstrate the strength of our unique model, with contributions from all geographical regions and a particularly strong performance in the Asia-Pacific region, which is achieving double-digit growth,” said Chief Executive Francesco Milleri and Deputy Chief Executive Paul du Saillant in a joint statement.

The turnover figures thus show that EssilorLuxottica continues to grow. This is a different story from the one reflected on the stock market in recent months. Yesterday, shares on the New York Stock Exchange rose by more than 5 per cent following the release of the figures, but year-to-date performance stands at -42 per cent. The decline in EssilorLuxottica’s market capitalisation, which currently stands at around 70 billion, is thus weighing on the value of Delfin, the holding company owned by the Del Vecchio heirs, and is unsettling shareholders, who have long been seeking a difficult agreement on governance and corporate structure, which, under the Articles of Association, can only be reached unanimously. According to several observers, it is precisely the complexity of the Delfin structure and the instability of its ownership that are contributing to the uncertainty surrounding the group’s future. Admittedly, shareholders have no say in the management of the holding company or that of EssilorLuxottica. But it is equally true that Delfin represents the subsidiary’s largest shareholder, with a 32.4 per cent stake, and in a few months’ time it will be called upon to vote on the reappointment of Chief Executive Francesco Milleri. A vote which, however, is not sufficient on its own to guarantee Milleri’s reappointment. Historically, attendance at EssilorLuxottica’s general meetings has been high, often close to 85 per cent. The vote of the market and the group’s French contingent will therefore be crucial.