Essilor Luxottica

Welcome to our third quarter training update. Astral Exotica posted another quarter of strong growth with top line in acceleration despite a tougher comparison base. During this period, our revenue were up 17% at current exchange rate, while if we look at our results at constant effects rate, you're looking at 8.2% growth. The main driver of the difference between constant and current FX results is very much the US dollar, that during the course of a third quarter revaluated approximately 17% against Europe. In Q3, pretty much all the regions posted solid growth. Asia Pacific and Latin America were at double digit pace. Europe was at a high single digit pace. And North America performed on a low single-digit territory, but with a very tough comparison base. As you remember, in the third quarter of last year, our North America grew 14% versus 2019. But before we start our journey across the different geographies, let me just give you a last touch on e-commerce. Our e-commerce division is contributing to 7% of our revenue base, with a top-line growth in the mid-single-digit territory. And now let's start our journey on page 12 of the presentation with North America. North America posted a third quarter top line growth at 3.4% at constant currency. I remind you that our second quarter revenue were up 2.4% versus 2021. Both professional solution and our direct to consumer division posted solid growth. If we look at a little bit closer, our professional solution division, both category lenses and frames were on the positive territory. From a channel mix standpoint, our key accounts, our department stores, our e-commerce partner were all positive, while the ECP, our independent ECP, decelerated in the negative territory during the course of a third quarter. When we look at our brands, the licensed luxury portfolio that we have was very much the key growth driver of our frame business, while on the lens side, Our branded Lent portfolio outpaces consistently the unbranded part of our portfolio. On the dollar-to-consumer side, we are very pleased to report that our Sanglassat Business, Oakley Retail, Purr Vision, and Target Optical, they all posted positive growth during the course of a third quarter, while LensCrafter was slightly negative, but against a very tough comparison base. As you remember, in the third quarter of 2021, LensCrafter reported a 9% calm sales versus 2019. Let's touch on e-commerce that posted a top-line growth at a mid-single-digit territory in the course of a third quarter, driven by Sunglassat, Oakley, and ibuydirect.com, this last one, that grew on a double-digit territory. But now let's move to Europe and let's look at a very outstanding growth for the third quarter. Our EMEA region grew 9% on top of a 9% in 2021 versus 2019. Our professional solution was on a high single-digit territory, and our direct-to-consumer division was on a double-digit pace. In professional solution, most of the countries delivered a strong growth, with Spain, Turkey, Middle East at a double-digit pace, while France, UK, Italy, they all performed on a mid-single-digit territory. The only major country that experienced a deceleration during the course of the third quarter was very much Germany, in light of a deceleration on the optical side of a business. If we now look at our two categories, lenses and frames, the lens side of a business delivers mid-single-digit growth with price mix that continues to be very strong, while on the frame side, the growth is more balanced between volume and price mix, with a double-digit delivery very much led by a strong sun season during the course of a third quarter. A last touch on the diet to consumer now. I would say and define and extend and deliver the results that we've seen in the third quarter. We delivered a double-digit top line growth on the top of a double-digit top line growth in 2021 compared to 2019. We have very much strong results pretty much across all the banners in the region. Sanglassat top line was approximately 60% in Q3. Salmuragi and Giganot deliver a double-digit growth, and GramVision that deliver a mid-single-digit growth in top line during the course of the third quarter. Now let's move east and let's touch Asia-Pac. In Asia-Pac, we experienced a strong acceleration of our results, where our top line was up 23% at constant currency. And I remind you, in the first half of 2022, our top line was up 2% in Asia-Pac. Let me walk you through what's driving that acceleration in the region. From a country standpoint, China was on the double-digit territory, driven by our professional solution division, with our Stellas Labs, and that is not a news, that continued to record exponential growth with a third quarter volume that doubled the one that we recorded in the second quarter. On the other countries, we reported top line and acceleration with a double-digit pace in India, in Southeast Asia, in Australia, while Korea was the last in line still with a high single-digit growth. On the Lens category, we grew the top line at double-digit pace with a strong ramp-up of our branded Lens portfolio with Barlux and iZen growing respectively at double-digit and high single-digit pace. Moving to Brick and Mortar now. Our top line grew in excess of 35% during the course of the third quarter. That top line growth was very much driven by a strong delivery of our optical and sun buttoners in Australia. This result was also helped by an easier base of comparability in Q3. As you might remember, the last year, Australia experienced a quite severe lockdown that clearly created a softer base for us. But now let's touch on the last region of the four, and that is Latin America. As you remember, Latin America was the best performer region during the last three consecutive quarters. During this quarter, they thought they would pass the lead to another region, namely Asia-Pacific, but they still delivered an outstanding 12.6% growth at cost and currency. Brazil was on the high single-digit territory, We were double-digit in Mexico, in Argentina, and in pretty much all the other Hispanic countries. In Latin America, our growth was driven by our professional solution division that posted a double-digit pace with both categories, lenses and frame, and a double-digit territory. On the lens side, we continue to see a strong double-digit growth with our Varux brand, While on the frame side, our growth was double digit when you look at our Sun and also our optical frame portfolio. But also when you look at Ray-Ban, Oakley and our luxury brand portfolio, you all see double digit growth. Once we move on the retail side, our brick and mortar revenues were on the high single digit territory for the course of the third quarter. That performance was very much driven by our Sun retail business across all the region, While on the optical side, we observed a deceleration very much driven by GMO that was up against a very tough comparison base in 2021 versus 2019. Now, let me hand it over back to the operator for the Q&A session.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad now. If you would like to remove your question, please press star followed by 2. The Q&A session will last 30 minutes. Please limit yourselves to a maximum of two questions and ensure your phone is unmuted locally. Our first question comes from Susie Tabaldi from UBS. Please go ahead. Your line is now open.

Thank you. Good morning, everyone. So my first question is focusing more on the top line. So you delivered 130 bits quarter-on-quarter acceleration, and I think if you ask few months ago to anyone in the market, they would have said it was almost impossible. So that's an excellent result. It seems that you had a very strong sun season, which obviously comes from relatively the complex year when we still had some COVID impact. So can you comment a little bit how much of the growth was driven by sun? And now that the sun season is pretty much over, what sort of normalized growth rate should we expect? And What trends did you see in September and October? And secondly, in H1, your EBIT margin grew 100 bits year on year, and at the same time, you were absorbing 100 to 150 bits inflation without any major price increase. And when we think about the H2 margin, the fact that the Sun category performs so strongly must have some pretty positive implications for your margin.