LensCrafters 2005 Annual Report Download - page 8

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|7<
To our shareholders,
2005 was another year of significant growth for our Group. The Group’s excellent performance
confirmed our position of global leadership in premium and luxury eyewear. For the first time,
consolidated sales exceeded Euro 4 billion, thanks to significant improvements in both our retail and
wholesale businesses. Profitability continued to be strong.
The key principles of our business model - full vertical integration of manufacturing and distribution
combined with the most comprehensive wholesale-retail coverage of key eyewear markets worldwide -
once again proved our strategy right. We are uniquely positioned to help maximize opportunities for growth
of some of the world’s leading fashion and luxury brands - and this helps us to attract new ones. In fact,
in 2005 we added another prestigious brand - Burberry - to our already strong and well-balanced portfolio.
In early 2006, we further strengthened it for the future by signing with Polo Ralph Lauren, the global brand.
On the retail front, we posted excellent results in all key markets, especially in North America, where
the performance of our LensCrafters and Sunglass Hut retail brands was well above averages for the
overall retail segment. Results like these are the best demonstration of the excellent work we are carrying
out on our store base, the product mix and the positioning of our retail brands. The operational portion
of the integration of Cole National, which was acquired in 2004, was successfully concluded after one
year of intense work. The first positive results will be confirmed in 2006 and beyond, especially from
Pearle Vision, for which we have high expectations.
In 2005, our entry into the retail market in China was a key step in our strategy for growth. Today we
manage the leading premium optical chain in China and Hong Kong. Our nearly 300 stores are only a
starting point. In coming years, we will see growing sales and increasing market shares in this key
market, where we expect to sell plenty of our premium and luxury eyewear Made in Italy.
For wholesale, 2005 was a particularly positive year. The significant increase in sales and profitability
reflected our ongoing improvement in distribution and stronger brand portfolio. Ray-Ban continues to
grow year after year, as do our main license brands Bvlgari, Chanel, Prada and Versace. The new Dolce
& Gabbana collections, launched in October, were an immediate success. As a result, today we enjoy
greater penetration in both existing and new markets, with already excellent results overall and
opportunities for additional growth.
Finally, 2005 was a year of positive developments also from an organizational perspective. We are now
stronger and more effective in the market, thanks to more impactful resources. As a result, today we are
more integrated, flexible, rapid and effective. Our wholesale-retail distribution model efficiently and uniquely
covers all key markets worldwide, China included. Thanks to that, our strong results for the year allow us
to look to a future with the expectation of more growth coming from the challenges that lay ahead.
May 2006
CHAIRMAN’S
LETTER
TO SHAREHOLDERS
Chairman