Essilux shares rebound in Paris following the announcement of the share buyback, driving the luxury sector

(Il Sole 24 Ore Radiocor) - Heavy buying in Essilorluxottica in Paris following the launch of a share buyback programme for up to 5 million shares, whilst the entire European luxury sector is recovering. At the previous day’s prices, the buyback is worth around 787 million and comes at a time when the share, which has fallen by around 40 per cent since the start of the year, is trading at a three-year low and has halved in value since last autumn (-49.09% from its peak on 14 November), partly due to the deadlock over Delfin’s governance.

Also in Paris, Hermès shares are trading strongly, LVMH, Kering, whilst in Milan Moncler is the top performer on the market and is also rising Brunello Cucinelli. There is also buying interest in Cartier Richemont in Zurich.

In particular, the share buy-back programme ‘reflects the company’s confidence in its ability to create value and in its long-term prospects’, the group emphasises, and to implement this, the company has authorised a specialist broker to purchase up to 5 million shares, to be carried out, subject to market conditions, from 28 August.

The announcement comes at the end of a turbulent week for Essilux, following Leonardo Maria Del Vecchio’s announcement that, as of 31 August, he will step down from all his roles within the company (namely Chairman of Ray-Ban and Chief Strategy Officer) to devote himself to new business ventures. Moreover, Leonardo Del Vecchio’s eight heirs, each holding a 12.5 per cent stake in Delfin (which owns approximately 32 per cent of Essilux), have long been in a deadlock over the execution of the founder’s wishes, who died in 2022. It should be noted that the Luxembourg-based holding company, in addition to its stake in Essilux, holds, amongst others, significant shares in MPS, Generali and Unicredit.

As Equita’s analysts have pointed out, Leonardo Maria del Vecchio’s departure from operational roles ‘restores a practice of separating ownership from management which appears appropriate at this time of tension within Delfin’s governance’, although “the sensitive issue for the company is the loss of Del Vecchio’s support for the work of Chairman and CEO Milleri, particularly with regard to Delfin’s governance”. In fact, “the articles of association guarantee Milleri the leadership role within the holding company, and this can only be amended with the unanimous consent of the eight shareholders”, the analysts explain.