This excerpt taken from the LUX 6-K filed Apr 28, 2006.
Board recommends the appointment of two new independent directors, bringing the total to six out of 14
Andrea Guerra, chief executive officer of Luxottica Group, commented: Our strong results for the first quarter represent a particularly encouraging beginning for 2006. Sales were up significantly in both wholesale and retail, by 39.4 percent and 17.7 percent, respectively, reflecting continued strength in our wholesale business and strong execution on our retail strategy - both in North America and Asia-Pacific. I am especially pleased with the significant improvement in profitability for the quarter, reflected in a year-over-year 200 basis points rise in consolidated operating margin.
Results of our wholesale division were extremely positive, with strong sales performance in all the markets where we operate. Fashion and luxury brands across our entire brand portfolio - especially Prada, Bvlgari and Chanel in addition to the recently launched Dolce & Gabbana collections enjoyed strong demand. Ray-Ban had another strong quarter, after the spectacular growth experienced in 2005 and three consecutive years of 20 percent growth. Operating margin for the entire wholesale division for the quarter improved to 26.0 percent, up year-over-year by 220 basis points.
This was another strong quarter for the Groups retail operations, with operating income rising significantly above the improvement in sales. In North America, overall performance across the entire division was above that of the premium retail sector in that market. Both LensCrafters and Sunglass Hut posted double-digit comparable sales growth the fourth such quarter in a row
for Sunglass Hut while Pearle Vision enjoyed a second consecutive quarter of positive comparable store sales, while profitability for the quarter more than doubled. In Asia-Pacific, results were strong within the Groups optical business both in terms of sales and profitability following the repositioning of the OPSM brand and strong demand for Luxottica fashion brands. On the profitability front, the overall strong performance resulted in an improvement of 250 basis points in operating margin for the entire retail division to 12.6 percent.
Results for the quarter reflected the impact of non-cash expenses for stock options(3) of 11 million, compared with no impact for the first quarter of 2005. For the full year, the Group expects a total impact of approximately 25 million.
Luxottica Groups net debt position on March 31, 2006, was 1,457.4 million, up from 1,435.2 million on December 31, 2005, as a result of the impact on working capital levels in conjunction with the strong rise in sales over the period.
Luxottica Groups consolidated U.S. GAAP results for the first quarter of 2006 were approved today by its Board of Directors.