Research archive for ESLOY

Last week we received full year results from Luxottica, one of our favoured consumer stocks based in Italy but with a listing in New York. In case you forgot Luxottica, according to their website, is the leader in design, manufacture, distribution and sales of premium, luxury and sports eyewear. Trademarks include Ray-Ban, Oakley, Vogue Eyewear, Persol, Oliver Peoples, Alain Mikli and Arnette. Licensed brands include Giorgio Armani, Bulgari, Burberry, Chanel, Coach, Dolce & Gabbana, Donna Karan, Michael Kors, Paul Smith, Polo Ralph Lauren, Prada, Starck Eyes, Tiffany, Tory Burch and Versace. You get the picture. The company wholesales these products in more than 130 countries across 5 continents. Along with all of that they operate over 7000 retail stores under the Sunglass Hut brand.

Luxottica reported sales that absolutely smashed expectations. Perhaps sunglasses sold like crazy in the last quarter as a result of being the hottest year on record. 2014 that was. Remember that this company has a strong retail presence selling sunglasses through their Lenscrafters and more well known locally that is, Sunglass Hut. You can download the Q4 results here -> Strong acceleration of Group adjusted net sales in the fourth quarter 2014: +15%. Nice. The fourth quarter was particularly strong when compared to the rest of the year, sales increased 9.3 percent at constant exchange rates. Ray-Ban, an in-house brand recorded double digit growth. Regionally North America was the best performing region, showing 19 percent growth in the wholesale division, emerging markets recorded 14% growth for the period.

Last week Luxottica released their 3Q results. You will remember that the company has been in a bit of turmoil lately with the ex-CEO, failing out with the founder and Chairman Leonardo Del Vecchio. Since then Del Vecchio took over executive roles until he recently appointed co-CEOs. Due to the "management crisis" so to speak the stock dropped around 10% at the start of October, it has recovered most of that lost ground over the last week though.

No! What happened at Luxottica? Another management disagreement with the founder and major shareholder no doubt, Leonardo Del Vecchio, taking the co-CEO role from Enrico Cavatorta, who quit. Another company director, Roger Abravanel also quit. The board is revolting against Del Vecchio. Del Vecchio has not filled some key positions, some independent board members are threatening to quit unless the roles of co-CEO's are filled. For the time being, the other co-CEO who was set to be beside Enrico Cavatorta in the sharing role, Massimo Vian, he has been suspended by the board. There seems to be a corporate governance breakdown, that is what the two independent directors are alluding to. Perhaps the founder and main shareholder, Leonardo Del Vecchio, who owns more than 60 percent of the company is flexing his muscles a little too much.

Oh dear, Luxottica share price is down around 2 percent this morning on the news that the CEO, Andrea Guerra, is leaving the company after nearly 10 years at the helm. Why? Well, it turns out that his mate is Matteo Renzi. And Renzi is the current Prime Minister of Italy. Guerra is the first non family member to run the Luxottica business, a company founded by Leonardo Del Vecchio. Del Vecchio is the second richest man in Italy and founder of the business, more importantly the 66 percent shareholder of Luxottica, the company that sells sunglasses through the Sunglass Hut. Luxottica also owns Ray-Ban and Oakley. The company, by revenue, is the biggest seller of eyewear on the planet, both sunnies, shades, cheaters (sun cheaters).

As you may know, having access to the New York Stock Exchange gives you the ability to invest in many exciting companies around the world. One of those companies which we have initiated coverage of over the last couple of months is the Italian sunglass manufacturer, Luxottica.