This excerpt taken from the LUX 6-K filed Mar 17, 2009.
Actions for 2009
The year 2009 promises to be a demanding one, especially in the first and second quarters. The comparison with 2008 will be challenging because of the structural adjustments that the market is undergoing. The first half of the year will see the completion of most of the measures that are enabling the Group to more effectively adapt to a changing market and to be best positioned for the future.
After posting its sixth consecutive year of double-digit growth, in 2009 Ray-Ban will continue to be the worlds leading eyewear brand thanks to, among other things, the success of its many iconic models, an improvement in the sales mix, acceleration in the prescription segment and the launch of collections that are particularly innovative in both design and materials (for example, Ray-Ban Tech).
In 2009, Luxottica benefits from the second full year of the integration with Oakley, further synergies between the two structures and the yet-to-be-fully-recognized potential of Oakley in Europe and emerging markets. The brand is expected to continue to grow significantly also in 2009, thanks to the launch of new models in the sports and high-performance segments, further development of optical and womens collections and an exclusive sun lens technology, one of the best available in the market today, that has the potential to generate strong synergies at Group level. The innovative Jawbone model, to be launched in the next few weeks, is expected to contribute significantly to the brands continuing success.
Regarding other projects, 2009 is an important year for REVO. This brands manufacturing and distribution in the sports channel are now managed by Oakley.
On the premium and luxury front, the Group is rolling out numerous projects, collections and special editions to attract customers less inclined to make purchases at this time.
Increased priority is being given to the more resilient prescription business, where Luxottica is looking to grow in terms of market penetration, client service and breadth of offering. Here the launch of the Prada Linea Rossa Vista collection will be an important contributor.
Particular care is going into the selection of the product offerings by geographic region and type of customer, so that commercial strategies are even more aligned with local needs. The approach to key clients will be made more effective to capitalize on the entire brand portfolio, with activities planned over increasingly longer periods and with investments in the potential of individual clients.
Building on the past three years of success, the STARS program will be continued. Its goal is to reach over 1,000 clients and to establish even stronger relationships of trust with an important category of clients.
In the retail division, after the entry into Thailand and India, the Group will consider new opportunities in emerging markets as well as premium locations that might become available even in the mature markets. In North America, the Group will continue to pursue a strategy of segmentation and differentiation in the approach to consumers by retail brand, to optimize the potential of each brand and attract new
consumers. Particularly relevant in this context will be LensCrafters, which is working to further strengthen its status of Americas leading optical brand by leveraging its values of excellence in service and breadth of offering.
MEASURES TO BOOST EFFICIENCY AND OPTIMIZE EQUITY STRUCTURE
After having rapidly completed the complex process of adjusting manufacturing capacity, in 2009 the Group will continue to drive the optimization of its working capital and balance sheet. In particular, the goal is to reduce inventories by approximately 10% to 15%, to see a significant improvement in the entire supply chain and to revise commercial terms with around 80% of suppliers.
New investments, which in 2009 will be just under Euro 200 million, will be carefully selected and focus on high value-added IT and supply chain projects.
There will be a strong focus on containing all expenses, at both the operating level and in the commercial areas. The brand portfolio and the international sales structure will be further optimized. Additionally. advertising spending will be cut in order to strengthen product promotion in the field.
The Group plans to optimize its global retail network, resulting in a 2% to 3% reduction in store numbers worldwide.
Luxottica expects to benefit from changing euro/dollar exchange rates in 2009 but is also looking intently at other currencies which have different impacts on sales performance and profitability.