Research archive for ESLOY

EssilorLuxottica delivered another solid quarter, with sales beating estimates thanks to strength in North America and momentum in high-growth categories like smartglasses and myopia management. Fourth-quarter revenue came in at EUR6.8 billion, up 9.2% year-on-year, outpacing the forecast of 5.86%.

EssilorLuxottica is a stock I like. This Franco-Italian company is the worldwide leader in eyeglasses, including prescription spectacles and sunglasses. Their major brands are Ray-Ban, Oakley and Persol, and their retail outlets include LensCrafters, Sunglass Hut, and Vision Express.

EssilorLuxottica's third-quarter revenue came in slightly below expectations, driven by weak sunglasses sales in North America and tougher economic conditions in Southeast Asia. EssilorLuxottica's shares are up 21.6% in 2024 which is impressive as the luxury sector is going through a bit of a meltdown.

The Wall Street Journal reported that Meta was in talks to buy up to 5% of EssilorLuxottica, the company that owns leading sunglass brands like Ray-Ban. A few Vestact clients have been long-term holders of their shares, even before the merger of Essilor (French, lens maker) and Luxottica (Italian, frame designer).

Why don't we hold more European stocks in Vestact portfolios? We get asked this from time-to-time, so it's a good question to address here.

Ray-Ban and Oakley eyewear maker EssilorLuxottica is a stock that I like. It's not widely owned in our customer base, but it could be.

One of the European stocks that I like is EssilorLuxottica, the dominant global manufacturer and retailer of eye and sunglasses. This group resulted from the merger in October 2018 of the French lens-manufacturer Essilor and the Italian luxury frame maker Luxottica (it owns the Ray-Ban, Oakley Oliver Peoples and Persol brands, and manufactures most luxury brand sunglasses).

The recently merged EssilorLuxottica (OTC:ESLOY) is a company that I like and own. The French-Italian-American conglomerate is the world's dominant eyeglass manufacturer and retailer.

Luxottica, the eyewear manufacturer, designer and distributor reported results last week. The business is made up of a few parts, the retail outlets you would know well as a customer, the Sunglass Hut, you would also be familiar with their brands if you bought online or at another outlet, Ray-Ban and Oakley, as well as Persol and a couple of others. You might also have worn one of the many licensed eyewear products that they manufacture for many luxury brands, here is a list of some of the brands you can buy at their outlets: Giorgio Armani, Burberry, Bulgari, Chanel, Dolce&Gabbana, Michael Kors, Prada, Ralph Lauren, Tiffany & Co., Versace and Valentino.

The headline reads: Essilor and Delfin to create a global integrated player in the eyewear industry with the combination of Essilor and Luxottica. This is going to be very big. The two businesses are likely to create a giant in eyewear, sunglasses and lenses. Essilor has a market cap of 22.3 billion Euros, trades on a 28 multiple (historic) and Luxottica has a 24 billion Euro market cap, and trades on a 30 multiple. The all scrip merger (accepted by the Del Vecchio family, through their entity Delfin) is done at the following ratio: 0.461 Essilor share for 1 Luxottica share.

Luxottica is one of the largest sellers of sunglasses on the planet, particularly in the luxury, fashion and sportswear arenas. They own Ray-Ban and Oakley's, as well as manufacture many different brands across the globe for all of the fashion houses. If you have a brand, old or new, the chances are that they are made in their 6 factories in Italy, three in China, one in Brazil, as well as a single facility in the USA and according to the company, a small plant in India. Pretty narrow focus. I am guessing then that you can be pretty sure that your last set of sunnies bought from their retail outlet (where you are most likely to have bought them) the Sunglass Hut was made in Italy or China. Be they Bvlgari, Chanel, Coach, DKNY, Giorgio Armani, Persol, Ralph Lauren, Michael Kors, or even more recent brands such as Tory Burch.

Luxottica is one of our non-core holdings which requires an extra look after some wild share price swings. To put things into perspective they hit $71.60 a share in October last year after a good run only to close at $54.37 last night. The price in Euros hit 65 Euros in October last year and closed at 49 Euros yesterday. This is not just a currency issue, the share price has been under pressure.

Luxottica is a company founded by an orphan, not that it matters too much right now. Although technically not , his guardians were too poor to look after him. He redesigned the world of sunglasses (sunnies, shades), as well as the way people look at these semi luxury items. A good pair is not cheap, it is almost technically a durable good in terms of the duration of the life of the product. We should recycle them more often, those old out of fashion scratched Oakley's should find a home somewhere, or be sent to sunglasses heaven. Or sunglasses hell, no doubt when you are being recycled, it hardly seems like a good outcome for the piece. Luxottica, the company is a manufacturer and seller of their own brands, as well as manufacturing brands for lifestyle brands across the globe.

We had numbers from Luxoticca on Wednesday. If you need reminding they are the guys that make sunglass brands Ray Ban, Prada, Oakley and a whole host of other brands. Over the past few months, most of the companies that we have written about talk about strong dollar head winds, Luxoticca is a European company which results in strong dollar tail winds instead. Group sales are up 15.4% compared to the same quarter last year but if we strip out the strong dollar tail wind, sales are only up 5.5%. If we look at EPS, in Euros it is up 19.8% but in US Dollars it is only up 0.5%.

Luxottica is a business that is interested in looking after your eyes, with sunglasses, yet they also have a very significant normal eyewear (glasses) business, you may be familiar with LensCrafters. Glasses manufacturing used to take a week or two, nowadays you can have them in no time, an hour! Their North American business is 56 percent of their total business, Europe is 20 percent of their business. Asia is only 14 percent of their business, that is all.