Ray-Ban parent EssilorLuxottica (ESLX.PA) saw sales growth slow in North America in its latest quarter, raising concerns about its exposure to recession in the United States and offsetting an improvement in its operating margin.
The Franco-Italian company whose brands also include Oakley and Varilux said its adjusted operating margin rose by 100 basis points to 18.4% in the six months to June 30, driven by its upscale brands.
“The main driver of that margin expansion for the first half was very much our price mix,” finance chief Stefano Grassi said on a call with analysts, pointing to new product launches and the strength of its luxury and branded lens portfolios.
However the group said sales growth in North America had slowed quarter-on-quarter, as business conditions in the United States deteriorated.
Bernstein analyst Luca Solca said in an email that EssilorLuxottica’s results and the analyst call confirmed a deceleration in the United States, the group’s biggest market.
“This dovetails with market concerns about an upcoming recession, to which EssilorLuxottica would be more exposed, given its larger and broader consumer audience,” Solca added.
The company’s shares were down 1.7% at 1150 GMT after falling nearly 4% earlier in the day.
Still, CFO Grassi said the company expected the North American business to stay in positive territory in July, in both professional and consumer segments.
The group’s comparable revenue rose 7% to 6.39 billion euros ($6.5 billion) in the second quarter at constant exchange rates, as the Europe, the Middle East and Africa (EMEA) region continued to bounce back with double-digit growth.
EssilorLuxottica also reiterated its medium-term targets for 2022 to 2026.
($1 = 0.9790 euros)