EssilorLuxottica sees profits go up in smoke

Over the past six months, EssilorLuxottica (Ray-Ban, Varilux) has seen its profits evaporate almost completely. In the meantime, the planned merger with GrandVision has led to a war between the two parties.

Targets will not be met

In these times of pandemic, many people have postponed their visit to the optician, which has impacted EssilorLuxottica’s sales. In the first semester, the eyewear giant’s revenue dropped 29 % to 6.2 billion euros. The Franco-Italian group hit a low in April, but benefited from a recovery in May and June, Le Figaro reports.

Many stores, factories and laboratories of the eyewear manufacturer had to close due to health measures, which also caused a collapse in profits: the group recorded an adjusted net profit of 7 million euros, a drop of no less than 99.3 % compared to the same period last year. The company’s operating profit amounted to 126 million euros, a drop of 91.7 % compared to last year’s 1.5 billion euros.

The Franco-Italian giant believes that the situation is still too uncertain to comment on the rest of the year and no longer expects to meet its financial targets. “However, it is likely that the third quarter will be another transition period towards normalisation”, the company adds. At the same time, EssilorLuxottica is accelerating its digitisation process and the group wants to launch “major product innovations”.

Merger turns into legal battle

In the meantime, the planned merger between EssilorLuxottica and GrandVision has also gone sour. Dutch owner of retail chains Pearle and EyeWish was served with a lawsuit, claiming it refused to disclose information on the management of the company during the coronavirus crisis. The candidate-buyer asserts the Dutch have thus contravened the terms of the merger. GrandVision has reacted by requesting the initiation of arbitration proceedings through which it hopes to force the buyer to honour the contract. 

EssilorLuxottica replied that “GrandVision and HAL’s reluctance to provide such information has increased the company’s concerns about their motives and the extent to which GrandVision has breached its obligations”. The European watchdog has also opened an investigation into the proposed acquisition. The compulsory closure of certain stores already seems inevitable in order not to jeopardise the free market.