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EssilorLuxottica wary of new COVID wave as sales recover in third quarter

·2-min read
Sunglasses from Ray Ban are on display at a optician shop in Hanau near Frankfurt
Sunglasses from Ray Ban are on display at a optician shop in Hanau near Frankfurt

(Reuters) - Eyewear maker EssilorLuxottica <ESLX.PA> said it clawed back some lost sales in the third quarter following the easing of lockdowns, but viewed the coming months with caution as a second wave of COVID-19 threatened to deal another heavy blow.

The maker of Oakley and Ray-Ban sunglasses said it would consider in December whether to pay a dividend by the end of the year, having suspended it in March when it also scrapped its guidance for the year.

Sales in the quarter ended Sept. 30 fell 1.1% at constant currencies from a year earlier to 4.09 billion euros (3.68 billion pounds), recovering some ground after almost halving in the second quarter as lockdowns eased and stores reopened.

The company said more than 95% of its stores had reopened globally by the end of September.

EssilorLuxottica said it was "confident about the structural resilience of optical needs" although "cautious about the near-term evolution of COVID-19 and about the amount of pent-up demand potentially fuelling the current recovery".

The company, formed in a 2018 merger between French lens manufacturer Essilor and Italian spectacles maker Luxottica, confirmed its target of cumulative net synergies, or cost efficiencies, from the merger of 420 million euros to 600 million euros for adjusted operating profit by 2023.

EssilorLuxottica, which also makes eyewear for luxury brands such as Chanel, Prada and Versace, added that revenue synergies had been delayed by temporary store closures but were gradually catching up.

PLANNED GRANDVISION DEAL

Dutch Opticians group GrandVision <GVNV.AS> - for which EssilorLuxottica has made a 7.2 billion euro bid - said in October it had returned to revenue growth in the third quarter but did not provide an outlook for the fourth quarter or 2021.

Essilor Chief Executive Paul du Saillant confirmed, in a conference call with analysts, that the planned GrandVision deal continued to make strategic sense and the rationale remained unchanged, adding M&A would continue to be a pillar of growth.

The process to obtain the green light from antitrust authorities was proceeding as expected, he added.

Du Saillant also said EssilorLuxottica was confident the legal proceedings to obtain more information from GrandVision about its management of the coronavirus crisis would have a positive outcome.

EssilorLuxottica said in September it would appeal against a Dutch court's verdict that rejected its claim that GrandVision had breached the takeover agreement by not seeking permission for actions it took as lockdowns extended throughout Europe.

GrandVision said at a Dutch hearing in August that it had always informed EssilorLuxottica about its actions.

It has said it is supporting the company in obtaining the remaining regulatory approvals, which are not affected by the appeal, for the planned takeover.

(Reporting by Silvia Recchimuzzi in Gdansk; Editing by Krishna Chandra Eluri, Kirsten Donovan and Pravin Char)