(News Bulletin 247) – The company recorded growth of 4% on a comparable basis in the third quarter, significantly less than expected by the consensus. But management expects an acceleration in its activity in the fourth quarter.

Despite its defensive nature and its innovative qualities, Essilorluxottica was not completely immune to the deterioration of the macroeconomy in the third quarter in China and the United States.

The specialist in corrective lenses and optical instruments achieved appreciable growth, in absolute terms, of 4% on a comparable basis over the period from July to the end of September. Especially when we know that LVMH saw its revenues decline by 3% over the same period, Essilorluxottica being sometimes associated with the world of luxury by the market.

However, analysts expected better since the consensus was at 5.8% for like-for-like growth, according to Royal Bank of Canada. The 4% growth also marks a clear slowdown compared to the second quarter when it stood at 5.2%.

“The visible slowdown compared to the second quarter is somewhat surprising without the difference taking on very significant proportions,” explains Oddo BHF.

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Gloomy sunglasses sales

Royal Bank of Canada notes that all major geographic areas disappointed. Like-for-like growth in North America (44% of sales) stood at 1.6% versus 2.6% expected by the consensus.

The region was particularly penalized by “the negative performance of the sunglasses category, due to an uncertain general macroeconomic context”, explains the company. The financial director, Stefano Grassi, however indicated that Sunglass Hut, the distributor of Essilorluxottica, specializing in sunglasses, had recorded a positive performance in September as well as in the first days of October.

“It is not very surprising that the group’s growth is struggling to reach 5% with North America remaining under control with growth below 2%,” notes Oddo BHF.

In Asia-Pacific, growth remained stuck at 5% when the consensus expected 9.1%. Stefano Grassi explained that Greater China (which includes Macau and Hong Kong) had seen its activity fade. “Clearly there is a deceleration compared to the trends observed in the previous quarter,” he argued, citing in particular the weakness of tourist traffic in Hong Kong. This is despite the good performance of Stellest, Essilorluxottica’s range of lenses intended to curb childhood myopia, with growth of 40%.

The “Europe-Middle East-Africa” zone grew by 5.6% on a like-for-like basis while the consensus was expecting an increase of 7.7%. “In Europe, the performance in retail (distribution to individuals) seems to have remained favorable, comfortably above 5%, but the negative impact of the Olympic Games on France has penalized the region’s performance a little,” explains Oddo BHF.

Confidence for the future

However, Stefano Grassi was encouraging for the future. The financial director indicated that Essilorluxottica expected its growth to accelerate in the fourth quarter compared to the figure for the first nine months of 2024 (+4.9%).

“We are entering the fourth quarter, aware of the assets that we will deploy (…) we will face the holiday season, Black Friday with a team committed and prepared for robust execution”, he argued .

According to Royal Bank of Canada, the consensus is for revenue growth of 6% excluding currency effects in the fourth quarter.

On the Paris Stock Exchange, Essilorluxottica shares advanced 0.1% around 10:30 a.m. this Friday after losing 2.6% at the start of the session.

“At this stage, we continue to find the investment case (for Essilorluxottica shares, editor’s note) convincing, combining regular growth in its core business and new opportunities for expansion (myopia management, connected glasses, hearing aids)” , underlines Oddo BHF.

“As of October 16, the stock gains more than +18% over 2024 for a Stoxx 600 at around 9% and a luxury sector down by almost 10%. This flattering relative performance reflects the stability of the growth profile of the group, hopes already placed in the emergence of new growth engines and unlike the luxury sector, modest exposure to the macroeconomic cycle in China”, adds the research office.

“Essilorluxottica is doing quite well in a difficult macroeconomic context. Innovation should support turnover growth in 2025 and 2026,” judges Royal Bank of Canada.