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China growth slows linked to looming Ray-ban maker EssilorLuxottica in first quarter According to Reuters

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© Reuters. FILE PHOTO: A frame of Ray-Ban sunglasses is sold in a Sunglass Hut, both brands owned by EssilorLuxottica SA, in Manhattan, New York City, U.S., November 30, 2021. REUTERS/Andrew. Kelly / File Photo

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By Juliette Portala

(Reuters) – EssilorLuxottica shares tumbled on Friday as a slowdown in business in China overshadowed the Franco-Italian eyewear company’s overall better-than-expected first-quarter revenue.

The group that makes sunglasses and eyeglass frames for Prada (OTC:) and Versace, which has reported “deteriorating” sales in mainland China as coronavirus cases soar, said about three-quarters of Their scores are affected by COVID related closures or reduced visitor numbers.

“We are still experiencing a severe drop in traffic there, adding that it is already common in only a handful of schools,” Chief Financial Officer Stefano Grassi said on a call. exception”.

China’s race to contain the pandemic has clogged highways and ports, stranded workers and closed countless factories, causing disruptions that are rampant in global supply chains. bridge.

Shares of EssilorLuxottica were down 1.9% at 1110 GMT, compared with a previous loss of 3.9%.

“The market and especially consumer and luxury stocks are suffering from growing concerns about a slowdown in China due to waves of waves,” wrote Bryan Garnier analyst Cedric Rossi in an email to Reuters. close the door”.

Those disruptions also put the French luxury company under wraps Kering (EPA:) first quarter results, reported on Thursday. Another analyst noted that its shares fell as much as 7% on Friday, affecting the entire luxury sector.

“A SAFE PLACE”

However, Grassi sounded optimistic, noting that sales of Stellest radiuses increased sharply in China, helping to correct children’s nearsightedness.

Stifel analyst Cedric Lecasble also emphasized that Ray-Ban’s exposure to China is very limited.

“The 5% sales level in China insulates EssilorLuxottica from the leading dilution experienced by its consumer partners,” analysts at Jefferies said in a note to clients.

“The team’s resilience to supply chain disruptions… has similarly established stocks as a safe haven,” they added.

EssilorLuxottica, which saw demand for sunglasses recover in the first three months of the year, reported revenue of 5.61 billion euros ($6.09 billion), up 38.1% at current exchange rates.

Analysts have generally pointed to a good start to the year, with group sales 2% above consensus expectations, according to RBC Capital Markets’ Piral Dadhania.

(1 dollar = 0.9219 euros)

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