Essilor Luxottica

Good morning and good afternoon, everybody. This is Giorgio Ionella from the IR team. Thank you for joining S0 Luxottica third quarter revenue management call. The group CFO, Stefano Grassi, will walk you through the revenue performance of the last quarter. After his presentation, there will be a 30-minute Q&A session. If you want to make a question, please press star followed by five. We kindly ask you to limit your questions to a maximum of two. With that, I hand it over to Stefano.

Good morning and welcome to our third quarter revenue results. We couldn't imagine today a better start of the second half of this year for AstroLuxottica, where our revenue posted a record high growth of 11.7% at constant currency. The best result ever for AstroLuxottica. The three largest geographies deliver all the double-digit growth with North America up 12.1%, with EMEA up 12.7%, with Asia-Pacific up 10.5%. Latin America deliver mid-single-digit quarter with a top line up 5.2%. Both our segment, Professional Solutions and Direct-to-Consumer, deliver a double-digit quarter. As an additional info for today's call, the two acquisitions, Heidelberg and Supreme, account for about 2 percentage points in our sales growth. The wearable products play a major role in our third quarter growth profile. We really now are building a brand new category with unprecedented opportunities to develop products and services that are associated with our glasses that now, I would say more than ever, should be imagined as a platform device. Just to give you an idea, our wearable category accounts for more than 4 percentage points in our growth profile at Constant Currency, and the exciting product pipelines that have been recently presented at the Meta Connector and that are about to hit the market, like the Oakley Vanguard, the Ray-Ban Meta second generation, the Meta Ray-Ban with an integrated display, I'm sure they will all further strengthen our leadership position in this key product category. But now let me switch gear and talk about e-commerce. Our e-commerce business posts an outstanding quarter at a double-digit pace with all the main platforms like Rayban.com, Oakley.com, Sunglassat.com. They all deliver a double-digit sales growth. Our revenue growth profile at current effects is affected by the devaluation of few currencies like the US dollar, the Chinese renminbi, the Turkish lira, and the Brazilian reais, which diluted our constant currency growth by about 5 percentage points, leading to a total growth at 6.7% for Q3. But now, as usual, let's begin our journey across the four different regions. And as per our tradition, let's begin with the largest one, North America. In North America, we have a third quarter at double-digit pace, 12.1%. We more than double the pace of growth that we deliver compared to what we had in the second quarter, where I remind you, we posted a top line up 5.5% at constant currency. In the professional solution, our B2B division, Our top line was up double digit. And Ray-Ban Meta clearly played a major growth driver in the B2B segment. Both our independence and key account posted a solid growth. And in those two distribution channels in North America, we were overall positive in lenses and positive in frame. So I would say a great momentum for our two optical channels in North America. Now, if we look at our two product categories, lenses and frames on the lens size, our revenue were up low single digit and the volume was really the main driver. I would say we were positive in a single vision business. We were positive on the progressive business. But now More than the performance on the lens, we are all very excited to really be the pioneers in myopia management in the United States. With our revolutionary lens that will be finally sold in the U.S. after we got the FDA approval. And AstroLuxottica will be the first to offer this lens that will materially help kids to slow down myopia progression. Let's touch on our frame business. Frame business was up on the double-digit pace with volume and price mix, both positive. With Ray-Ban, that was double-digit. And even when you exclude the impact of wearables, you would be looking at Ray-Ban that was up a single digit on Sun and was double-digit up on the prescription business. So I would say that probably in Ray-Ban, we do have a sort of a hollow effect. coming from the excitement around the wearable products, that it's also creating some benefit on the other part of the Ray-Ban business. If we now move to the dollar-to-consumer, I would say that we are extremely pleased with the third quarter outcome as our comp sales were up 7% on a comp basis With Lance Crafter, they had the best quarter of the year with the comp sales in excess of 8%. And Sangla Sat, they likewise posted the best quarter of 2025 with comp sales up around 8.5%. I would say that for both of them, we had strong fundamentals in terms of traffic, conversion, volume, and price mix. And just to add a further perspective to this performance, I can say that the first few weeks of October show a further acceleration trend in both Lance Crafter and Saint-Glazat. So very excited about the third quarter result, even more excited by the trajectory as we enter in the fourth quarter. And now let's move to Europe. Europe was up 12.7%, material acceleration compared to the second quarter delivery of 9.1%. This represents the 18th consecutive quarter of revenue growth in the EMEA region and the best results since the first quarter of 2022. Let me share with you a few highlights here. From a country standpoint, Italy, Germany, UK, Turkey, Eastern Europe and Middle East, they all posted double-digit growth. When we look at our two distribution channels, both professional solution, B2B, direct-to-consumer, they were all up double-digit. Our professional solution key channels, the independent, the large key account, our e-commerce partners were all positive. And when we look at our two product category, lenses and frames, both positive. On the lens side, I would say the price mix was the main driver. While when we look at our frame business, both volume and price mix, they were strong. When we look at our Branded Lens portfolio on the B2B side, we are very happy with the key brands. Varilux, Aizen and Transition, they all deliver high single-digit growth. Our Myopia Management Lens, Steles, deliver a double-digit quarter. Now, let's move to the other distribution channel, the direct-to-consumer one, for a minute. And let's talk about our 6,000 EMEA stores that in the third quarter delivered the best quarter for 2025 with comp sales up 9.4%. And both Optical and Sunbanners delivered an even pace of growth during Q3. In Optica and Nia, we have the double digit comps in Italy, double digit comps in Germany, in UK, in Portugal, in Turkey, in Ukraine, and a high single digit comp sales in the Nordics. The subscription model is continuing to deliver outstanding growth. It's now representing 22%. of our revenue in the optical business for EMEA, and it's about three percentage points higher than what it was in the third quarter of last year. Let's now shift to Sun. We had a very tough comparison base on the Sun business in EMEA, but we are pleased with a strong delivery in the third quarter. We had a strong demand for sunglasses during the summer season. We, two out of the three months of Q3, delivered a double-digit pace, and so far, the fourth quarter, is a double-digit quarter. So can't really wish anything better for our sun business in the EMEA region. Now, let's move east and let's touch Asia-Pacific. A double-digit quarter, material acceleration compared to the 7.8% that we had in the second quarter for the Asia-Pacific region. It's the best quarter so far in Asia-Pacific. We had, from a country standpoint, China up on the high single digit, Southeast Asia, there was double digit, Korea, there was double digit, and Japan to deliver a double-digit quarter. Just to share with you a bit of a highlight of what happened in the Asia-Pacific region. In China, Stellis 2.0, the new generation of our myopia lens, progressively rolled out during the course of a third quarter. You remember we launched at the beginning of July, and we're now prioritizing clinics, hospitals, and selected key accounts. And so far, I must say that the early readings are very reassuring because we are getting a clear indication of strong productivity in the doors where Stellas 2.0 is actually sold. The overall myopia solution category continues to gain traction in China and now represents a third of our revenue in the country with the overall portfolio that is growing approximately 20%, a constant currency during the course of a third quarter. The frame business, the frame product category, were actually strong in the quarter for China. We delivered a double-digit quarter. I would say the main driver for that was the luxury portfolio and the Oakley brand. And now let me just give you a quick touch on the direct-to-consumer side. The optical stores in the region deliver a low single-digit comp sales, and I would say we had a soft Hong Kong business, while on the other side, mainland China was up double-digit, and OPSM delivered a low single-digit quarter. But now let me move to the last region in our journey, and that is Latin America. Latin America, as I mentioned at the beginning, was a mid-single-digit quarter, with both channels delivering mid-single-digit growth. In Brazil, we had a low single-digit Q3. Ochoacarol was a bit soft in Q3, I would say primarily due to a timing difference that we had between last year and this year, in the presentation of the FRAME Collection. I believe we should get most of it back in the fourth quarter. But outside Ochacarol, the FRAME and the LEMS business were solid positive. The Astro Luxottica Days were held in Brazil at the beginning of Q3, so a large engagement. I would say probably an unprecedented engagement of our key clients and independents. and the payback was very evident in my view when we look at our order intake on the key accounts. If we look at now our other two countries, Argentina was up double digit, volume was the main driver on the frame business, and price mix was really the main driver on the land part of the business. Mexico, another key country in the region, delivered a mid-single-digit growth, and kudos here to our Dice to Consumer partner, and in particular to Sunglassat and Grand Vision Mexico, that were very much instrumental to our growth in Mexico. But now 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.