MILAN The world's largest eyewear group Luxottica (LUX.MI) said like-for-like sales fell 3.5 percent in the first quarter, hit by a recently introduced policy of reducing discounts and promotions online and across its retail network.
The fall compared with a 0.5 percent increase in the last quarter of 2016 and a 1.6 percent rise in January-March last year.
Overall first-quarter sales at constant currencies rose 1.9 percent, broadly in line with expectations, as growth in Europe and Latin America was largely offset by weak consumer spending in the United States, the company's biggest market.
The maker of Ray Ban sunglasses said first-quarter sales totaled 2.38 billion euros ($2.60 billion), compared with analysts' average forecast of 2.37 billion euros as compiled by Thomson Reuters.
Luxottica, which is merging with the world's top lens producer Essilor (ESSI.PA) to create an eyewear powerhouse with 16 billion euros in revenue, is targeting low-to-mid single-digit growth in sales at constant currencies this year.
Including the impact of currency moves, first-quarter sales rose 5.2 percent, helped by the group's expanding retail network.
"This is not a particularly good set of results," said Luca Solca, an analyst at Exane BNP Paribas. "Overall top line growth is in line with expectations - but this result is supported by perimeter (Salmoiraghi) and store openings," he said, referring to Luxottica's move to acquire full ownership of optical chain Salmoiraghi & Vigano in late 2016.
Luxottica's revenues have suffered in recent quarters as the group introduced a new policy aimed at curbing online discounts of its biggest brand Ray Ban and cut ties with several independent distributors in China.
Chief Financial Officer Stefano Grassi told a conference call with analysts the new strategy had actually had a smaller impact on first-quarter revenues than initially expected by the company. He said like-for-like sales were expected to improve during 2017.
Overall retail sales grew 3.3 percent at constant currencies in January-March to 1.426 billion euros, while wholesale revenue was flat. In North America, where Luxottica makes nearly 60 percent of its revenues, sales fell 2.5 percent at constant currencies, countering a 17.4 percent surge in Europe and a 5.5 percent increase in Latin America.
Luxottica's soft start to the year compares with a 7 percent rise in first-quarter revenue reported by France's Essilor earlier this week, net of currency moves.
The Italian group said the second quarter had had a positive start and confirmed its outlook for the year.
Luxottica and Essilor expect to complete their merger, announced in January, by the end of the year after receiving a green light from various antitrust authorities.
($1 = 0.9189 euros)
(Editing by Mark Potter)