Essilor Luxottica

Good morning and good afternoon, everybody. This is Giorgio Ianella from the IR team. Thank you for joining S0 Luxottica Q1 Revenue Management Call. The Group CFO, Stefano Grassi, will elaborate about the revenue drivers of the first quarter of the year. After this presentation, there will be a 30-minute Q&A session. If you want to make a question, please press star followed by 5. We kindly ask you to limit your questions to a maximum of 2. With that, I hand it over to Stefano.

Hello everyone and welcome to our Q1 2025 results. We're here today to comment an excellent start of 2025, despite a microenvironment that is clearly more uncertain than ever seen in recent years. AstroLuxottica delivered a first quarter with revenue up 7.3% at constant currency and 8.1% at current exchange results. Asia Pacific was up double digit, while EMEA delivered a 9.9% top line growth at constant currency. Latin America was approximately 9%, and our North America region delivered a mid-single digit quarter with a 4% top line growth. The impact of the two recently acquired, Heidelberg Engineer and Supreme, accounts for about two percentage points in our top-line growth profile. So even excluding those from our revenue growth, you will be looking at an underlying company marching at a mid-single-digit pace, very consistent with the long-term guidance that we share with you between 2022 and 2026. Moving to FX now, let me just share that in Q1, currencies created finally, I would say, some tailwinds in our numbers, with about one percentage point of difference between constant and current exchange. And the main reason for that is the revaluation of the US dollar against euro year over year, which was approximately 3% during the course of the first quarter. Unfortunately, those tailwinds will vanish if currencies stay at those levels throughout the second quarter onwards. And that is mainly due to the recent devaluation of the US dollar against Europe. Now, before starting our journey across the four regions, let me just give you a quick update on Nuance Audio, the breakthrough innovations which has been recently launched in the United States, in Italy and just a few days ago in France. The product in itself is now available in 4,700 doors between direct-to-consumer and a B2B channel with very encouraging results. It's a bit premature to talk about numbers now, but let me share that consumer feedback are extremely enthusiastic in both North America as well as in Europe. So stay tuned for more news in the upcoming quarters. But now let me move through the four different regions. And as usual, let's begin with the largest one, North America. In the region, we had a solid quarter on the direct-to-consumer that deliver high single-digit quarter, while the professional solution side of a business was flat year over year. In the B2B, we experienced a strong quarter in our key accounts, and I would say that is true for both lenses and frames, while our independent channel were actually negative on the first quarter, in particular due to some softness on the lens business. From a frame business standpoint, Ray-Ban was up double digit, very much driven by a strong Ray-Ban meta and also by a stronger prescription business of Ray-Ban. On the luxury side, I would probably put on the spotlight two brands, Miu Miu and Chanel. If we now move to the lens. On the lens side, we had a stronger and positive single vision lenses, while the progressive part of our lens business was actually flattish year over year. And I would say the main reason is on the ECP side. We have seen, in particular with Varilux, that the ECP were kind of waiting for the launch of the upcoming Valelux Physio Extensy that will hit the North American market between the end of the second quarter and the beginning of Q3. On top of that, I would say Nikon was solid positive mid single digit growth. Shamir had an excellent quarter with high single digit growth in Q1. Very last touch on price mix. Price mix was positive, was positive in lenses, was positive in frames, and I would say this is something very consistent with what we've seen in the last few quarters for professional solution North America. Now let's move to direct-to-consumer. We're kicking off 2025 in an excellent manner. We were mid-single-digit comp sales in St. Glastat and high single-digit comps in Optica Retail. Sanglassat is a very consistent trajectory of what we've seen in the last few months with stronger comp sales growth. And that's obviously very pleasing because we remember that Sanglassat came from a trajectory of tough and negative comp sales for quite a while. And now we're very pleasing to see from the last quarter of 2024 and now in Q1, a very strong and consistent pace for our retail banner in North America. On the optical side, LensCrafter was high single-digit comps, we had positive traffic, we had a very strong conversion, and the growth was very much driven by positive volume. Target optical, high single digit comps, while per vision was actually on the mid single digit delivery from a comp sales standpoint. So very compelling picture of our retail proposition, both optical and sun. And the positive thing that I can tell you right now is that April is very much continuing on the same pace. Now let's move to another important region, Europe, EMEA, that is 9.9% up at constant currency. This is the 16 consecutive quarters of revenue growth in the EMEA region. A couple of highlights here. Professional solution delivered a high single-digit quarter, while our direct-to-consumer channel was up double-digit. All the countries in the region were solid positive in Q1, With Germany, there was double digit. With UK, there was double digit. With Scandinavia, Eastern Europe and Middle East, there were double digit. Italy delivered a high single digit quarter. So you can see a widespread positive and strong trend across all the countries in the region. On professional solutions side, a few comments on the different channels. Independents were solid positive in Q1 with the key accounts that were up double digit and with e-commerce partners that were up on a high single digit territory. Our premium lens portfolio delivered another outstanding quarter, and that is very much confirming the fact that the appreciation of the market for our brands, whether it's Nikon, Varilux, Eisen, or Transition, it's all there. And the positive thing is that the growth was very much driven by volume. Now let's switch channel. Let's move to direct-to-consumer. Happy to report another remarkable quarter for both Optical and Sanimia. Both the channel, sun and optical, deliver high single-digit comp sales. On the optical banners that we put on the spotlight, two banners, Salmeraghi Viganò and Apollo, they both deliver double-digit comps. That was very much driven by a strong retail execution and an excellent service level for both of them. On the SunnyMia part, I would highlight UK, that despite the negative traffic, did really well on conversion and mix management. Now, the third region on the pipeline is Asia-Pacific. Double-digit growth, 10.4% at constant currency, a great start of the year for the Asia-Pacific region, second consecutive quarter at double-digit pace. Japan and Korea were double-digit, while Greater China, India, and Southeast Asia deliver a mid-single-digit speed in Q1. If we look at for a second a bit closely China, I would say that consumer spending in China was still under pressure in Q1. So not really a material change from what we commented during the second half of 2024. But the positive thing is here is that the vision care part of our business is clearly showing strong resilience throughout the quarter. And in this environment, I would say We are very happy with the myopia solutions that deliver a growth at about 30% in Q1 and now represent 26% of the revenue base in Greater China. The key driver of this performance is usually Stellast, and we've seen that happening consistently in the last few years, but also the other alternative technology, the DOT-1, that has been developed in partnership with Cooper Vision and is now distributed through the brand of Nikon and Kodak. Outside the Maniopia solution, well, Boulogne was slightly weak due to a soft sellout on the B2B side, while Oakley and the overall luxury portfolio were very strong, delivering a double-digit quarter. If we move now to direct-to-consumer, the almost 1,600 stores that we have in the region did well in Q1, with mid-single-digit optical comms very much driven by a strong OPSM and the Mainline China optical banners that deliver strong comm sales in Q1. Two brands like Oakley and Ray-Ban were actually very strong in Japan, and the retail banners underneath those brands actually delivered an outstanding quarter at a double-digit pace in Japan. Now moving to Latin America, 9.2% growth at constant currency, 17 consecutive quarter of positive growth in the Latin region at constant currency. Two things I would highlight here. First one, Brazil. You remember Q4 last year was a tough quarter for Brazil, but during our last call on Feb 12, I wanted to reassure you that we were entering in 2025 with a different trajectory in Brazil. And here we are. Brazil delivered a double-digit quarter driven by Sunglass Up and Oakley Retail. They were both up double-digit with Ochica Carol and Photochica that delivered mid-single-digit growth. with our B2B frame business that was up double digit and the lens part of our business B2B was up mid single digit. Let me say that in this respect, the introduction of Transition Gen S in the market in Brazil during the end of last year, early this year, was definitely instrumental to get the proper strong trajectory in the region. Last touch on the retail banners. The delivery for the rest of the region outside Brazil, I would say, was remarkable in Q1. GMO and the Grand Vision banner deliver high single-digit comps, while sunshine on our SanglaSat Mexican banners with mid-single-digit comp sales, very much driven by strong airport location. And I would probably mention today the Cancun one that show all our SanglaSat location up on the double-digit pace. With that, let me hand it over to the operator for the Q&A session.

Ladies and gentlemen, we will now start the Q&A session. Our first question comes from Oriana Cardani, Indesa, Sao Paulo. Please go ahead, Oriana. Yes, good evening.