LensCrafters 2007 Annual Report Download - page 64

COMMENTS ON FINANCIAL
RESULTS FOR THE PERIOD | 63 <
Net sales
Net sales increased by Euro 289.9 million, or 6.2%, to Euro 4,966.1 million during 2007 from Euro
4,676.2 million in 2006. Of such increase, Euro 87.0 million is attributable to the inclusion of net
sales of Oakley, Inc. (“Oakley”) for the period from November 14, 2007, which was the date of the
closing of the Oakley acquisition (“acquisition date”), until the end of the year. The remaining
increase in net sales primarily resulted from the strong performance of the manufacturing and
wholesale segment, which was partially offset by Euro 36.7 million in negative currency fluctuations
between the Euro, which is our reporting currency, and other currencies in which we conduct our
business, particularly the U.S. Dollar.
Net sales in the retail segment decreased by Euro 31.9 million, or 1.0%, to Euro 3,262.3 million in
2007 from Euro 3,294.2 million in 2006. Excluding the effects of currency fluctuations, the retail
segment would have experienced an increase in net sales of Euro 218.2 million, or 6.6%. The
growth for the period was mainly due to the following: (i) a Euro 28.5 million increase attributable to
the inclusion of Oakley’s net sales related to its retail operations for the period from the acquisition
date; (ii) a 0.2% increase in same-store sales; (iii) the addition of Euro 15.4 million in sales from the
approximately 70 new Canadian retail stores which were acquired in June 2006, and therefore
owned for only a portion of 2006; (iv) the addition of Euro 44.5 million in sales from approximately
90 new U.S. retail stores which were acquired in February 2007; and (v) a Euro 62.9 million
increase in net sales from the “Asia-Pacific” retail business, of which Euro 15.8 million in net sales
was due to the newly acquired stores in China and the remaining amount was mainly attributable
to sales growth in Asia-Pacific.
Net sales to third parties in the manufacturing and wholesale segment increased by Euro 321.8
million, or 23.3%, to Euro 1,703.8 million in 2007 from Euro 1,382.0 million in 2006. Excluding the
effects of currency fluctuations, the manufacturing and wholesale segment would have
experienced an increase in net sales of Euro 368.2 million, or 26.6%. Of such increase, Euro
58.5 million is attributable to the inclusion of Oakley net sales for the period from the acquisition
date, and the remaining increase was mainly attributable to increased sales of our Ray-Ban
brand as well as the continued success of sales of branded products of our designer lines, such
as Prada, Dolce & Gabbana, Versace and Bvlgari, and the launch of new products from our
license agreements with Burberry and Ralph Lauren. These increases occurred primarily in the
European and North American markets, which, together, accounted for approximately 78.1 and
COMMENTS ON FINANCIAL
RESULTS FOR THE PERIOD
At 31 December (Euro/000) 2007 2006
Net sales 4,966,054 100.0% 4,676,156 100.0%
Cost of sales 1,575,618 31.7% 1,487,700 31.8%
Gross profit 3,390,436 68.3% 3,188,456 68.2%
Selling and advertising expenses 2,069,280 41.7% 1,948,466 41.7%
General and administrative expense 487,843 9.8% 484,002 10.4%
Income from operations 833,313 16.8% 755,987 16.2%
Other income (expense), net (52,631) 1.1% (77,810) 1.7%
Income before taxes 780,681 15.7% 678,177 14.5%
Provision for income taxes 273,501 5.5% 238,757 5.1%
Minority interests 14,976 0.3% 8,715 0.2%
Net Income from Continuing operations 492,204 9.9% 430,705 9.2%
Discontinued operations -- (6,419) -
Net income 492,204 9.9% 424,286 9.1%