LensCrafters 2003 Annual Report Download - page 3

Download and view the complete annual report

Please find page 3 of the 2003 LensCrafters annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 65

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65

5
TOOUR SHAREHOLDERS,
2003 was a year of important changes within our Group, a year during which results clearly reflected the impact of
a difficult global economic environment, with declining consumption and the devaluation of the U.S. Dollar against the
Euro. As a result, for the first time Luxottica Group saw a temporary slowdown in its historical growth rates.
With respect to the devaluation of the U.S. currency, this represented most of our year-over-year decline in
profitability. Despite this, we decided against reflecting its impact on our wholesale prices. This allowed us to further
strengthen the competitiveness of our products and, as a result, consolidate our market share. In fact, we believe that
while exchange rate variations are a temporary event, in the long term the market share gained over the years is one
of our most important assets and must be carefully defended.
With respect to our brand portfolio, in 2003 our objective was to reduce the risk related to the renewal of licensing
agreements with designer brands. To this end, we worked to increase the average length of such agreements
replacing a brand that was expiring with two new designer brands: Prada, for ten years, and Versace, for ten or
twenty years. Additionally, to strengthen our portfolio of house brands during the year we launched the Ray-Ban
Ophthalmic and Junior lines. As a result of this rebalancing, today house brands represent two thirds of our portfolio,
increasing over the previous year. During the first months of 2004, our wholesale results in terms of sales and
profitability support the validity of our strategic decisions.
At the retail level, despite the year-over-year decline in sales due to the difficult economic environment especially in
the U.S., operating income for the year at constant exchange rates were flat thanks to our continued efforts to control
costs and improve productivity. This confirmed that the strategy to invest in retail is rewarding for the long term. As a
result, during 2003 we closed the acquisition of OPSM Group, an optical chain with stores in Australia, New Zealand,
Hong Kong, Singapore and Malaysia, thus gaining an important market share in that region. Similarly, at the beginning
of 2004 we launched the acquisition of U.S.-based Cole National Corporation, which we hope to close in the second
half of 2004.
CHAIRMAN’S LETTER TO SHAREHOLDERS
Leonardo Del Vecchio