LensCrafters 2008 Annual Report Download - page 40

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> 38 |ANNUAL REPORT 2008
sales to third parties in 2008 would have been down by 1.8% from 2007 due again to the strengthening of
the Euro. At constant exchange rates, the decrease would have been Euro 65.9 million (1.3%).
Geographically speaking, net sales to third parties in Europe in 2008 were Euro 1,077.2 million (up 5.5%,
from 2007). Despite the increase in net sales to third parties in Europe, such sales decreased to 51.5% of
the segment’s total net sales in 2008 from 59.9% in 2007, due primarily to the inclusion of the Oakley
business, which caused a proportionately greater increase in net sales to third parties in North America.
In the United States and Canada, net sales to third parties was US$ 716.9 million, representing 23.3% of
the segment’s total net sales in 2008 as compared to 18.1% in 2007. The 67.8% increase was driven by the
inclusion of Oakley’s results and a good performance by house brands (especially Ray-Ban and Vogue). In
Euro terms, net sales in North America rose by a more modest 57.7% because the increase due to the
inclusion of the dollar-denominated Oakley business was diminished by the strong Euro.
In the rest of the world, net sales to third parties were up 41.3% to Euro 527.8 million in 2008, representing
25.2% of the segment’s total net sales in 2008 compared to 21.9% in 2007.
The segment’s operating income in 2008 was Euro 545.6 million, up 3.3% from Euro 528 million in 2007
thanks to the Oakley business. Pro forma(2) operating margin declined to 22.1% from 23% in 2007.
It should be noted that Ray-Ban continued to drive the segment with double-digit growth in both sun and
optical products, confirming itself the global leader in terms of market share and brand equity.
Authenticity, iconoclastic cool, quality and function are the brand values that have written the brand’s
history of success and continued to inspire its strategies and product launches in 2008, ever in line with the
“Forever Ray-Ban” brand mission: continuous brand re-invention around a constant set of core values.
The key event in 2008 was the Wayfarer launch. Luxottica gave the market a genuine reproduction of the
original 1952 model, recreated down to the smallest details with the latest manufacturing technology and
with an explosion of fashion colors in both frames and lenses. A full product offering, a dedicated
advertising and PR plan and visibility in all points of sale confirmed Wayfarer as today's edgiest icon in
eyewear.
Ray-Ban has always stood for quality and function, yet 2008 marked a highly important new stage in its
growth. In the sun business, polarized lens sales saw global growth thanks to an expansion of the crystal
range, offering improved clarity and protection. In the optical business, the launch of the Titanium and
Memorize styles scored worldwide success with their appeal to consumers looking for comfort, lightness
and design.
In November 2008, as part of the same high-value strategy, Ray-Ban made its second limited edition
launch: the “Caravan Ultra Limited Edition”. After the success of Aviator in 2007, another key icon,
Caravan, was released in precious materials like gold and titanium, with ultra high quality polarized lenses
and special color enhancement. Caravan Ultra was distributed to strictly selected retailers and sold
excellently worldwide.
High satisfaction was also delivered by the Oakley brand. Despite organizational discontinuities, Luxottica
managed to considerably develop the brand’s sales and visibility in European and emerging markets, thus
demonstrating the enormous value, current and future, of the 2007 acquisition created by the
complementary strengths of the merged businesses.
Sales of Oakley brand sunglasses were up from 2007 across all categories (sport/active, lifestyle, men’s and
women’s), partly due to massive presence at the 2008 Beijing Games, which boosted brand awareness and
sales.
Oakley’s lifestyle collection continued to garner worldwide attention thanks to styles such as Hijinx and the
newly released Antix. Oakley’s sport line showed strong growth with the introduction of Enduring, Oakley’s
first women’s sport-specific piece, and with continuing success by Flak Jacket and Radar.
(1) Pro forma data reflects the inclusion of results by Oakley, Inc., a subsidiary that was acquired in November 2007, as if it had been acquired on
January 1, 2007.