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Oakley Boosts Parent in Difficult Q4

Published March 12, 2009

MILAN, Italy (BRAIN)—Oakley sales helped push its parent company, Luxottica, over the 5 billion euro mark for the first time in its history in 2008 despite a difficult end to the year.

Luxottica reported net sales of 5.2 billion euros last year, up from 4.96 billion euros in 2007, according to a year-end earnings report released by the company on Thursday. Full-year net income fell 17.6 percent.

Luxottica was not immune from the economic challenges in the fourth quarter and reported a drop in net income of 44.2 percent—from 96.9 million euros in 2007 to 54.1 million euros last year—for that period. At 1.2 billion euros, fourth quarter net sales were up 4 percent at constant exchange rates.

“In the fourth quarter of 2008, overall demand contracted significantly, resulting in a reduction in margins for both the retail and wholesale divisions: sharp and sudden declines in sales have an immediate impact on operating margins, especially for the retail division,” said Andrea Guerra, chief executive officer of Luxottica.

At the same time, the company took a number of significant steps within its manufacturing and logistics operations, to start getting its balance sheet to optimal status.

Luxottica benefited from the merger with Oakley through ongoing investments (around Euro 300 million over the course of the year) and measures to boost sales and improve efficiency from which the company expects to reap significant advantages in the coming quarters, Guerra said.

Looking ahead to 2009, Luxottica expects to benefit from the second full year of the integration with Oakley, including the 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 women’s 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 brand’s continuing success,” Guerra said.

For more specifics on Oakley’s performance in 2008, read the April 1 issue of Bicycle Retailer & Industry News.

—Nicole Formosa

Topics associated with this article: Earnings/Financial Reports

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