Dive Brief:
- Luxury eyewear manufacturer EssilorLuxottica posted a fiscal 2023 revenue increase of 3.7% to 25.4 billion euros, or approximately $27.2 billion at current exchange rates, according to a Wednesday earnings report. Gross profit for the year was up 3.1% to 16.1 billion euros.
- The EMEA region saw a 5% revenue boost, “becoming the greatest contributor to the overall growth of the Group in 2023.” Meanwhile, the Asia-Pacific region saw an increase of 6.8%, led by China, which was “on the fast track starting from February thanks to the reopening,” per the company. Luxury frame licenses in the region were among the top performers, and its DTC division “grew double digits.”
- Elsewhere, the Latin America region was up 9%, with double-digit DTC growth for the second consecutive year, while North America saw a 1.3% increase, hurt by “continuous weakened demand throughout the year” for Sunglass Hut, “despite a slightly less negative trend in the fourth quarter.”
Dive Insight:
As the world’s largest eyewear company, EssilorLuxottica benefits from both an aging global population in need of corrective eyewear, and a luxury sector reliance on accessories to drive consumer spending in the category.
Eyewear also continues to be a strong category in fashion, with a January report from the Vision Council stating that 93% of adults in the U.S. “regularly wear some form of eyewear.”
For EssilorLuxottica, which in addition to Sunglass Hut owns brands including Ray-Ban and Oakley, and manufacturers licensed eyewear for brands including Prada, Ralph Lauren, Chanel, Michael Kors, Coach and Burberry, demand remains steady.
The company saw a revenue acceleration in Q4 “with every one of our regions doing its part,” Francesco Milleri, chairman and CEO, and Paul du Saillant, deputy CEO, said in a joint statement.
“Our profitability remained strong, with a record adjusted Group net profit close to 3 billion euros and free cash flow at 2.4 billion,” read the statement. “It was also a year of major investments: growing new product categories, with Stellest in myopia and Ray-Ban Meta in wearables, adding beloved brands like Moncler and Jimmy Choo to our portfolio, leveraging artificial and business intelligence, expanding our operations footprint and reinforcing the retail presence globally.”
Even luxury companies that have struggled against changing market demands are seeing success in the eyewear category. Kering, which saw a 4% revenue drop for fiscal 2023, posted a record revenue of 1.5 billion euros in its eyewear division for the period, representing a 35% year-over-year increase.
For companies with strong revenue growth, eyewear remains a critical element. For example, Prada Group reported a 12% revenue increase to 3.34 billion euros for the nine months ended September 2023, and CEO Andrea Guerra stated on a call with investors that the company’s eyewear was a “super business.”
“I think that the success of a number of styles of Prada during last summer were very visible in all resorts of the world,” Guerra said. “So I think the success is visible. There is no secret about it and the relationship with Luxottica is today pretty good.”
Looking ahead, EssilorLuxottica confirmed in its earnings that it has a target of “mid-single-digit annual revenue growth from 2022 to 2026 at constant exchange rates,” and said it expects to achieve an adjusted operating profit as a percentage of revenue “in the range of 19-20% by the end of that period.”
