Luxottica on track with targets and Essilor deal after steady first half

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MILAN (Reuters) – Italian eyewear group Luxottica is on track to meet full-year targets and win regulatory approval for its planned merger with France’s Essilor, it said on Monday, after its first-half underlying operating profit came in just ahead of forecasts.

The maker of Ray-Ban replica sunglasses agreed in January to merge with Essilor (ESSI.PA), the world’s biggest lens manufacturer, to create an industry leader with annual sales of more than 15 billion euros (13.82 billion pounds).

Luxottica (LUX.MI) CEO Massimo Vian told Reuters on Monday the merger, which needs to clear antitrust hurdles in several countries, was progressing well.

He also confirmed full-year guidance for a low-to-mid single digit percentage rise in sales at constant currencies and broadly similar operating and net profit growth, excluding one-off items.

“We stick by our outlook … and we do so with a lot of positive energy,” he said.

Luxottica’s sales grew 1.8 percent at constant exchange rates in the first half to 4.92 billion euros, roughly in line with estimates.

Operating profit came in at 899 million euros net of one-off items, ahead of an average estimate of 873 million euros in a Reuters poll of analysts and up 1.9 percent year-on-year at constant currencies. It accounted for 18.3 percent of sales.

An expanding retail network lifted European sales by 15 percent net of currency swings in January-June.

But sales in North America, which account for about 57 percent of the total, fell 1 percent, hurt by Luxottica’s efforts to curb discounts applied to its spectacles both online and at its Sunglass Hut and LensCrafters retail chains.

A streamlining of the group’s distribution network in China aimed at fighting counterfeiting and a parallel market for replica Ray Ban sunglasses drove Asia-Pacific sales down 5.6 percent.

After cutting independent distributors last year to deal directly with retailers, Luxottica decided to focus on direct sales either online or through its Ray Ban shops while keeping only a few selected wholesale clients.

“We became even more convinced that our strategy was right … and we decided to speak directly to consumers,” Vian said.

Following news last week of the departure of another senior manager at Luxottica, Vian said he was firmly committed to the group which he considered “more as a family than as a company.”

Luxottica has been through several management changes since founder and top investor Leonardo Del Vecchio took back the reins of the company around three years ago.