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Luxottica, A long way to growth - Investors & Analysts presentation

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Luxottica Group

Luxottica reported record results in fiscal year 2012, with all-time high sales of €7 billion, up 14% year-over-year. Operating income increased 22.3% to over €1 billion. Free cash flow generation exceeded €700 million. Demographic and economic trends in emerging markets and developed countries are fueling long-term expansion in the eyewear industry.

Investor Relations
Related topics:
Emerging Markets Overview • Board of Directors • Economic Growth Insights
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Al long way to grow t Milan, Milan March 1, 2013 1
FORWARD LOOKING STATEMENT Certain statements in this investor presentation may constitute “forward-looking statements” as defined in the Private p y g Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those which are anticipated. Such risks and uncertainties include, but are not limited to, our ability to manage the effect of the uncertain current global economic conditions on our business, our ability to successfully acquire new businesses and integrate their operations, our ability to predict future economic conditions and changes i consumer preferences, our ability t successfully i t d diti d h in f bilit to f ll introduce and market new products, our d k t d t ability to maintain an efficient distribution network, our ability to achieve and manage growth, our ability to negotiate and maintain favorable license arrangements, the availability of correction alternatives to prescription eyeglasses, fluctuations in exchange rates, changes in local conditions, our ability to protect our proprietary rights, our ability to maintain our relationships with host stores, any failure of our information technology, inventory and other asset risk, a ta ou e at o s ps t ost sto es, a y a u e o ou o at o tec o ogy, e to y a d ot e s , credit risk on our accounts, insurance risks, changes in tax laws, as well as other political, economic, legal and technological factors and other risks and uncertainties described in our filings with the US Securities and Exchange Commission. These forward-looking statements are made as of the date hereof, and we do not assume any obligation to update them. This investor presentation contains measures that were not prepared in accordance with IAS/IFRS. For a reconciliation of non-IAS/IFRS measures used in these materials, see the Company’s press release titled “Luxottica completes 2012 with record results” dated February 28, 2013, available on www.luxottica.com Luxottica results website under the Investors tab.
FY 2012 RECORD RESULTS Continuing to fuel C ti i t f l profitable and sustainable growth, fit bl d t i bl th backed by a solid balance sheet › All-time high sales: €7 billion (+14% Y-o-Y) All time Y o Y) • Solid North America driven by excellent execution • Sound Western Europe • Emerging markets leading the way • Astonishing execution in Australia › Strong Group operating leverage: +100bps • Adj. operating income(1) over €1 billion (+22.3%) › Breaking another record: free cash flow(1) g generation, in excess of €700 million › Deleveraging continues: net debt/EBITDA(1)(2) at 1 25x 1.25x › Dividend proposal of €0.58 vs. €0.49 in 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 3
FY 2012 DYNAMIC GROWTH ACROSS GEOGRAPHIES North America Western Europe Emerging markets +6% +4%(2) +26%(2) US$ For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 4
FY 2012 RESULTS Enrico Cavatorta A long way to grow 5
ALL-TIME HIGH SALES FY12 4Q12 +13.9% +8.2% At constant f t t forex(2) At constant forex(2) t tf +7.5% +5.1% Wholesale at constant forex(2) Wholesale at constant forex(2) +10.0% +9.0% Retail comps(3) Retail comps(3) +5.8% +4.5% For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 6
OPERATING INCOME Showing Sh i continuous i ti improvements t FY12 Group 4Q12 Group (€ mn) adjusted(1)(4) (€ mn) • +90bps @ constant forex(2) • Best margin since 2007 10.0% 14.2% 13.2% 13 2% 164 1,004 9.2% 821 139 FY 2011 FY 2012 4Q 2011 4Q 2012 FY12 Wholesale (€ mn) FY12 Retail adjusted(1)(4) (€ mn) • +50bps @ constant forex(2) • Details on slide 11 21.8% 13.3% • Tecnol dilution 60bps 11.9% 21.5% 604 574 529 449 FY 2011 FY 2012 FY 2011 FY 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 7
NON-RECURRING ITEMS IN 2012 Impact on Group Impact on Group operating income net income (€ mn) (€ mn) Australian retail reorganization -21.7 -15.2 • Restructuring costs related to the reorganization of the optical retail stores located in Australia and New Zealand (impact on 1Q12) Extraordinary tax accrual - -10.0 • Accrual for tax audit of fiscal year 2007 A long way to grow 8
STRONG FCF(1) GENERATION DRIVING DELEVERAGE Strengthening financial profile St th i fi i l fil Net debt(1) (€ mn) Net debt/EBITDA(1) (@ c.fx(2)) from 1.7x to 1.25x, after: 2.032 • €227 million dividend payment 1.662 • €130 million invested in acquisitions FY 2011 FY 2012 • Despite increased capex from €307 million to Free cash flow(1) (€ mn) €365 million 720 496 FY 2011 FY 2012 ∆ days Operating working capital (€ mn) • DSO -2 2 • DSI +7 (inventory build up at year end due to 39 SAP go-live in Italian factories) -7 • DPO +2 FY 2011 FY 2012 A long way to grow 9
RESULTS IN LINE WITH 2012 “RULE OF THUMB” % growth vs. FY11 (@ current forex) (@ constant forex(2)) ) SALES GROWTH HIGH SINGLE-DIGIT +14% +7% ADJUSTED OPERATING INCOME(1) 2x SALES GROWTH +22% +15% ADJUSTED NET INCOME(1) 2x SALES GROWTH +24% +16% APPROACHING NET DEBT/EBITDA(1) 1.4 – 1.5x 1.25x For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 10
RETAIL MARGINS EVOLUTION
 Solid S lid margin i i improvement i 2012 t in FY 2011 FY 2012  bps Adjusted retail 11.9% 13.3% +140 US$ from 1.39 to • Excluding forex - -40bps 1.28 Adjusted retail j 11.9% 11 9% 12.9% 12 9% +100 @ constant forex(2) GMO, Tecnol, • Excluding Latam and Iberia expansion +10bps +40bps Sunglass Hut Latam and Iberia Adjusted “core” retail 12.0% 13.3% +130 @ constant forex (2) A long way to grow 11
2013 “RULE OF THUMB” SALES GROWTH HIGH SINGLE-DIGIT(2) OPERATING INCOME/ 2x SALES GROWTH(2) NET INCOME NET DEBT/EBITDA BELOW 1.00x 1 00 Entering 2013: › Tough comparison with 1Q12 by far the best quarter in 2012 1Q12, › Unfavorable exchange rate effect vs. 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 12
BEHIND THE RULE OF THUMB Andrea Guerra A long way to grow 13
REVENUE ROADMAP BY GEOGRAPHY North America Western Europe Emerging markets olesale(2) +20-30% +10-15% +18% +19% +15% +15% +4-7% Who +6% +3% 2011 2012 2013E 2011 2012 2013E 2011 2012 2013E 2012 includes Tecnol North America OPSM Australia Emerging markets +10-15% +10 15% Retail(3) +4-5% +6-8% +16% +11% +6% +10% +5% +4% 2011 2012 2013E 2011 2012 2013E 2011 2012 +15 2013E -18% Total sales: +76% 2011 & +51% 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 14
2013 BRAND PORTFOLIO Further F th growth ahead th h d Premium and Launching g Ray-Ban R B Oakley O kl luxury Armani High i l di it Hi h single-digit Double-digit D bl di it growth th Strong d bl di it St double-digit Targeting €130 T ti growth growth; million in sales recently launched the Atelier division A long way to grow 15
SECULAR GROWTH DRIVERS FUELING LONG-TERM EYEWEAR EXPANSION Andrea Guerra A long way to grow 16
SECULAR GROWTH DRIVERS Demographics l di th way, h D hi leading the heavily supported b mega t d il t d by trends DEMOGRAPHICS PENETRATION PREMIUMIZATION EMERGING MARKETS NEW CHANNELS GATEWAY & MEGA CITIES A long way to grow 17
DEMOGRAPHIC CATALYSTS 
 Under-corrected i d t U d t d industry • Growing population • Ageing population • Increased need for eye correction due to behavioral 7.7bn global changes population 7bn 7b global population 4.8bn require vision 4.2bn correction require vision correction 2.2bn 1.7bn 1 7b vision vision correction correction wearers wearers 2011 2020E Additional 500 million vision correction wearers by 2020 Source: Industry data and company estimates A long way to grow 18
PENETRATION
 Significantly under-penetrated category Si ifi tl d t t d t › Developed markets opportunities Market growth 2020 • Highly fragmented industry • Still under-educated eyewear consumers • US sun premium market significantly 2012 below European level Developed markets optical › Emerging markets opportunities Developed markets sun • Increasing standards of living Emerging markets optical • Highly under-educated eyewear consumers Emerging markets sun Eyewear market penetration Eyewear: an industry in its infancy Source: Industry data and company estimates A long way to grow 19
PREMIUMIZATION Accessories d i i l A i driving luxury consumption ti › Accessories to outperform the luxury WORLDWIDE LUXURY MARKET CAGR 11-14 industry › Eyewear undergoing structural €240 bn Total +7-9% perception changes: from medical Others +8-9% €190 bn devices to fashion accessories Perfume • Shortening replacement cycle & cosmetics +3-5% • Multiple purchases Accessories +9-11% Apparel +5-7% 2011 2014E Eyewear: the smallest and fastest growing category within accessories Source: Fondazione Altagamma and company estimates A long way to grow 20
EMERGING MARKETS The ld Th golden age h yet t come has t to 2011 WEIGHT OF EMERGING MARKETS Different stages of development across emerging markets Luxury & consumer goods Eyewear › Prescription backbone • Emerging markets lacking 48% 48% 43% infrastructure 37% • Under-educated eyewear 19% 16% consumers Experiential Fragrances Personal luxury Premium Premium Premium › Sunglasses a category to luxury skincare sunglass prescription discover Eyewear: early stage of development, waiting for the big wave Source: Industry data and company estimates A long way to grow 21
EMERGING MARKETS Increased opportunities to capture additional share of wallet I d t iti t t dditi l h f ll t THE BIG & FAST GROWING EMERGING MARKETS Population GDP CAGR › Driving world 2012 million 2012-2016E GDP 7.8 LUXOTTICA NEXT China 1,329 3.7 THREE YEARS Brazil 195 7.2 CAGR India 1,220 1 220 › Ri i upper Rise in +15-20% 15 20% Turkey 75 4.9 middle class Mexico 115 3.7 consumers NEW EMERGING MARKETS Population GDP CAGR 2012 million 2012-2016E › Proliferation of Indonesia 248 6.5 luxury stores Philippines 104 6.0 and rising Vietnam 90 6.5 LUXOTTICA NEXT consumer 4.8 THREE YEARS Thailand 69 CAGR 5.2 brand Malaysia 29 +20-30% Taiwan a a 23 3 3.5 awareness Andes Region 50 5.3 Russia 143 3.9 Premium eyewear currently a “drop in the ocean” Source: Industry data and company estimates A long way to grow 22
DEPARTMENT STORES The i t f f Th point of reference for premium consumers f i SALES/SQM PER CATEGORY › Sunglasses sales/sqm growing fast fast, despite limited space allocation € thousands/sqm 18-30 • Ranking 10th in space allocation per category vs. 20th three years ago 12-18 13-16 • <1% of department stores sales vs. >25% for each other category › Luxottica selling now to over 2,000 4-8 doors, expected to more than double by 2015 › Growth spurt coming from emerging Sunglass Wholesale Sunglass, directly Perfumes & cosmetics Clothing & apparel markets managed % Retail space 0.3-0.5% 1-2% 20-30% 40-50% allocated Sun: from seasonal to permanent display in a US$200 billion market Source: Industry data and company estimates A long way to grow 23
TRAVEL RETAIL, INDULGING WHILE TRAVELING <1% space allocated t eyewear vs. approx. 50% f perfumes & cosmetics 1% ll t d to for f ti 2005-2010 SALES GROWTH IN TRAVEL RETAIL 200 Sales growth index Sunglasses (2005 100) (2005=100) 180 Stationery 160 Beauty Electronics Watches 140 Liquors 120 Tobacco 100 2005 = 100 2005 2006 2007 2008 2009 2010 Sun: the fastest growing category in a US$45 billion market Source: Industry data and company estimates A long way to grow 24
A NEW PLAYING FIELD: GATEWAY & MEGA CITIES Urbanization, a wealth of opportunities f premium eyewear U b i ti lth f t iti for i Amsterdam London Beijing Berlin Moscow Tianjin Zurich Wuhan Chicago Paris San Francisco Milan Istanbul New York City Barcelona Delhi Chongqing Seoul Las Vegas Chengdu Tokyo Ahmedabad Los Angeles Cairo Dubai Shanghai Miami Riyadh Calcutta Hong Kong Surat Mexico City Abu Dhabi Yangon Manila Mumbai Foshan Shenzhen Dongguan Chennai Ch i Guangzhou Singapore Jakarta Lima Rio de Janeiro São Paulo Mega cities Gateway cities Buenos Aires Cape Town Sydney Source: Industry data and company estimates A long way to grow 25
LUXOTTICA TOP TEN FOCUS CITIES Population GDP / cap growth cap. MEGA CITY 2011 million CAGR / ‘11-17E Delhi 23 4.6 Mexico C ty e co City 20.5 05 1.9 LUXOTTICA NEXT 3 Shanghai 20.5 6.4 YEARS CAGR São Paulo 20 2.6 +30-40% Mumbai 19.5 4.7 Jakarta 19.5 5.0 GATEWAY CITY London 13 1.3 New York City 19 1.8 LUXOTTICA NEXT 3 YEARS CAGR Paris 12 0.6 +15-20% Los Angeles 13 2.2 Source: Industry data and company estimates A long way to grow 26
SHAPING THE INDUSTRY External drivers supporting L E t ldi ti Luxottica’s effective execution on growth engines tti ’ ff ti ti th i DEMOGRAPHICS OPTICAL PENETRATION EMERGING MARKETS PREMIUMIZATION OAKLEY EMERGING MARKETS SUNGLASS HUT NEW CHANNELS NORTH AMERICA GATEWAY AND MEGA CITIES A long way to grow 27
RELENTLESS OPTICAL EXPANSION FUELING RESILIENT GROWTH
 Paolo Pezzutto A long way to grow 28
RELENTLESS OPTICAL EXPANSION Fueling F li resilient growth ili t th › Demographics and behavioral changes driving market growth › Health benefit still overriding emotional benefit • Only 1/4 of wearers consider optical frames as a fashion accessory y › Luxottica underpenetrated in the optical segment t • 2/3 of global eyewear market is optical vs.1/3 for Luxottica (based on units sold) Optical represents an untapped opportunity A long way to grow 29
BUILDING OPTICIANS’ TRUST THROUGH SERVICE EXCELLENCE A “solution provider” and a partner f opticians “ l ti id ” d t for ti i › Strategizing offer and service through organizational evolution • Dedicated optical department since 2010 • LuxLab: innovative technical solutions to facilitate lens mounting g • New “Atelier division” boosting creativity in optical › Continuing to invest in after-sale services • More efficient spare parts and repair management through authorized local service centers - 94% of spare p orders ship within 5 days ( p part p y (86% in 2010) ) • New on-line back-up support: brand information, shipment tracking and re-orders Proximity, on time and more connection A long way to grow 30
BUILDING OPTICIANS’ TRUST VIA TARGETED PRODUCT INITIATIVES Resizing R i i product strategy and collection architecture d t t t d ll ti hit t › More design and development centered on development-centered optical collections • Prada “optical capsule collection” • Conveying PR messages on optical experience › Extreme focus on style and fitting • Stylistic features addressing local trends • Technical features addressing different fitting g g needs in Asia Comfortably stylish… adapting to our customers’ needs A long way to grow 31
RAY-BAN First Fi t ever optical collection dates back to 2003 ti l ll ti d t b k t › Optical wholesale sales outperforming sun: 100% 1937-2003 Sun >30% CAGR 2009-2012 • Consolidated consumer-oriented segmentation offering targeted solutions 25% 70% Optical › Ray-Ban emerging markets collections with y g g 2012 75% dedicated PR and marketing activities since Sun 2010 • Internationally launched styles in 2012: 54% of which >40% are available with Asian fitting 60-65% • Local design collections for China, Southeast 35-40% Sun Asia d India: A i and I di 46% styles t l 2016 Optical - Now launching the first locally designed 30% collection in Brazil A long way to grow 32
THE RISING WAVE OF EMERGING MARKETS Paolo Alberti A long way to grow 33
2012 DRIVING FORCE, EMERGING MARKETS Unmatched geographical presence U t h d hi l › Leading market position at early stages of industry development › Relentless growth in both divisions: +26%(2) • 13% of Group sales • B t wholesale performers: B il Chi Best h l l f Brazil, China, Eastern Europe, India, Mexico and Turkey • Latin America sprinting ahead in the retail division: Sunglass Hut Mexico comps(3) +29% and GMO comps(3) +9% Emerging markets approaching 20% of Group sales by 2016 A long way to grow 34
LEVERAGING THE BRAZILIAN PLATFORM Integration completed successfully I t ti l t d f ll › 2012 eyewear sales up by 48%(2) • Brazil already the fourth largest wholesale market in 2012 › State-of-the-art manufacturing processes › Boosting international collections & localized production IMMAGINE G • Successful launch of Vogue “Made in Brazil” › New commercial organization and stronger supply chain driving further penetration and improving service level p g A long way to grow 35
EXPANDING THE BRAZILIAN PLATFORM “Premiumizing” th eyewear i d t “P i i i ” the industry › Doubling eyewear sales over the next five years • Attracting fast growing premium customers • Improving doors segmentation • Investing to double production capacity by 2015 › Ready for Ray-Ban & Arnette launch in March and Oakley by year-end › Profitability enhancer from 2013 The second biggest wholesale market by 2015 A long way to grow 36
SURFING THE RISING WAVE OF EMERGING MARKETS India: further I di f th consolidating our presence lid ti › Early entrance helped build a solid market share • Ray-Ban brand awareness is among the highest in the world › Doubling production capacity for Ray-Ban and Vogue Indian collections g › 2013-2016 expected wholesale sales growth at >20% CAGR • Sales CAGR in past three years: >30% › Sunglass Hut expansion continuing: now 40 stores, one in every premium mall A long way to grow 37
SURFING THE RISING WAVE OF EMERGING MARKETS Southeast Asia: th next emerging markets to tackle S th t A i the t i k t t t kl › Leveraging Singapore hub to further expand the business › Wholesale sales +30% CAGR in the last four years Vietnam Taiwan › Accelerating investments Thailand Philippines • Planning direct presence in Indonesia Malaysia y and Th il d d Thailand • Accelerating Malaysia, Vietnam and Philippines Indonesia Sales expected to double by 2015 A long way to grow 38
SURFING THE RISING WAVE OF EMERGING MARKETS China: h i ht i l Chi heightening local execution l ti › A recognized leader in the premium segment • Wholesale sales almost doubled yearly since 2010 - Sales expected to grow at >40% CAGR in the next three years - China to become #10 market by 2014 › Consolidating optical retail excellence in China • Adding approx. 40 LensCrafters stores › Expanding production capacity • Building a new 37,000sqm production site A long way to grow 39
OAKLEY’S LONG JOURNEY: A COMPELLING OPPORTUNITY 
 Colin Baden A long way to grow 40
2012 HIGHLIGHTS › Another year of double-digit growth › Maintaining Oakley’s strong brand momentum • Olympics increased brand visibility and awareness • Unified & global brand campaign launch: Beyond R B d Reason • Powerhouse of global and regional athletes A long way to grow 41
2013 AND BEYOND: DOUBLE-DIGIT OPPORTUNITIES Balanced growth across products and regions B l d th d t d i OPTICAL WOMEN EUROPE EMERGING MARKETS A long way to grow 42
OPTICAL: A WORLD OF OPPORTUNITIES A very l long-term strategic focus t t t i f › 4th year in a row of double digit growth double-digit • Crosslink: successfully created a new sport optical segment for men › Created best-in-class service around revolutionary ideas › Elevating in store experience through training • Oakley destinations with frame boards, improved assortments and merchandising • Improving sales tools › New product innovations on the way Doubling optical sales in three years A long way to grow 43
EXPLORING THE WOMAN’S WORLD Beautifully b l B tif ll balancing style and performance i t l d f › Fast growing opportunity › Building momentum in key North American regions › Growing strategic partnerships to drive in- in store presence & brand awareness • New destination areas within O stores • Launching exclusive products with Sunglass Hut Kerri Walsh, Beach Volleyball • Targeted advertising campaigns within key regions Expanding segment A long way to grow 44
ENSURING SUSTAINABLE AND PROFITABLE GROWTH IN EUROPE
 Building B ildi momentum t › In 2012, brand awareness up 4 10% across 2012 4-10% Europe › Invest in the brand with simple and compelling stories & point of sales improvements • Create consistent consumer experiences across p touch points • Gain valuable retail space at point of sales • F Focus on store staff training t t ff t i i › Strengthen position in eyewear and goggles › Grow within selective distribution channels Expecting double digit growth in Europe between 2013-2015 A long way to grow 45
DEVELOPING BRAND STRENGTH IN EUROPE Continue t engage and b ild relationships with consumers C ti to d build l ti hi ith Active lifestyle sun/optical Sport performance sun/optical Snow goggles A long way to grow 46
THE EMERGING MARKETS FIELD Establishing localized strategies E t bli hi l li d t t i › Emerging markets currently represent approx. 12% of Oakley’s sales › Strengthening presence in China, India, South Korea and Brazil • Continue to develop brand awareness and positioning • Deliver top performing Oakley styles with Asian fit • Strengthening focus in optics in Brazil Asian business to double in three years A long way to grow 47
DESIGN & INNOVATION TO SUPPORT NEW PRODUCT RELEASES
 Always at the forefront in sport & performance Al t th f f t i t f › Balance of iconic and casual styles › New materials & techniques: carbon fiber, titanium hi tit i hinges, aluminum l i › Line extensions that reach new customers › Styleswitch – first lifestyle product with Switchlock technology › Crosslink Switch – interchangeable lens carrier technology › Lens storytelling for different environments A long way to grow 48
DIGITAL INNOVATION REINVENTS SNOW EXPERIENCE
 Oakley i O kl airwave snow goggle l › Airwave snow goggle with heads up display heads-up integrates the following technologies: • Bluetooth connectivity • GPS • Resort mapping • Buddy tracking • Onboard apps • Apple iPhones and Android operating system smart phones capabilities - caller ID and text messaging A long way to grow 49
SUNGLASS HUT: ENGAGING GLOBAL CUSTOMERS
 Fabio d’Angelantonio A long way to grow 50
CELEBRATING ANOTHER YEAR OF GLOBAL GROWTH Sunglass H t “th sun experience” S l Hut “the i ” › €1 billion sales (+12 8% at constant forex(2)) (+12.8% • Worldwide comps(3): +9.8% • North American comps(3): +10.1%, double-digit g p g growth for the third consecutive year • Conversion driving volumes and mix driving AUR › Strong improvement in profitability › Global expansion moving ahead • Strengthening in the sunbelt • Entrance in Spain & Portugal A long way to grow 51
GLOBAL LEADING RETAIL BRAND Winning through enhanced S Wi i th h h d Sunglass H t experience l Hut i › Sunglass Hut sells FEEL GOOD! • It’s all about delighting consumers • Brands celebration and training › Strong & effective organization and operating model • Global “360° SunglassHutization” with a local touch › Working on digital convergence • E-com • Omni-channel • Storytelling A long way to grow 52
GLOBAL GROWTH IS UNDERWAY On t k t O track to manage 4,000 stores b 2015 4 000 t by › Strengthening penetration in the sunbelt • Focus on Mexico, Brazil and India • New channels: E-com, department stores, travel retail › The next frontier for expansion: Latam, Southern Europe, Asia Turkey Iberia Mexico India Middle East Brazil Targeting €2 billion sales by 2016 A long way to grow 53
WINNING IN MEXICO › The biggest sun chain • Approx. 90 stores in 20 cities • Good presence in airports and tourist areas • +29% comps(3) in 2012 • North America “halo” effect on the brand › +40% sales CAGR by 2015, highly p profitable › Adding 100 stores by 2015 • Exploring department store channel A long way to grow 54
WINNING IN BRAZIL Getting G tti ready for upcoming FIFA World Cup and Ol d f i W ld C d Olympics i › Greenfield start up • Over 20 stores opened in 15 months › Store network • Expecting to double store network in 2013 • Reaching 5-6x of current level by 2016 • Sales to accelerate exponentially • Exploring franchising model A long way to grow 55
WINNING IN INDIA › Strong franchising partnership • 40 stores in 17 cities, including Mumbai, Delhi and Kolkata › +30% CAGR sales by 2015 › 100 stores by 2015 • Exploring department store and mall expansion • Soon opening flagship store in Delhi A long way to grow 56
NORTH AMERICA: FURTHER BENEFITING FROM A UNIQUE MIX OF ASSETS
 Mark Weikel A long way to grow 57
LEVERAGING A UNIQUE MIX OF ASSETS IN 2012
 More synergies t come M i to › Solid sales growth in North America: +6% in US$(1) • Strong sales growth in wholesale : +15% in US$(1) • Total North America retail comps(3): +6% › Synergizing wholesale and retail activities › Evolving retail organization • New leadership at Retail Optical North America A long way to grow 58
NORTH AMERICA: DRIVING CATEGORY GROWTH Focusing on customers & consumers through even stronger collaboration F i t th h t ll b ti RONA Lux US Wholesale Lab Network A long way to grow 59
INVESTING IN BRAND EXPERIENCE @ LensCrafters LensCrafters will continue t elevate th b d i 2013 L C ft ill ti to l t the brand in …more emotional …celebrity …vibrant …a greater …lens imagery… endorsement… storytelling... focus on sun… leadership A long way to grow 60
LENSCRAFTERS Amplifying A lif i our connection with customers via enabling i t ti ith t i bli in-store technology t h l A long way to grow 61
2013 AND BEYOND Winning in the Wi i i th marketplace k t l “Luxottica expects sustainable sales growth & ongoing margin i i i improvement t by leveraging the industry’s strong secular drivers through effective execution of growth engines” A long way to grow 62
ONESIGHT OneSight is an independent nonprofit organization providing sustainable access to quality vision care and eyewear in underserved communities worldwide. Since 1988, OneSight has given the gift of sight to more than eight million people in 37 countries and has granted millions to fund optical research and education. Thanks to generous annual operating support and skilled volunteers from Luxottica, public donations to OneSight directly fund programs to provide healthy vision for millions more in need. 2012 results Vision care programs -S Served 243 108 adults and children th d 243,108 d lt d hild through more th 90 vision clinics and community h than i i li i d it Learning to read becomes possible for this first- programs across 6 continents grader after receiving his first eye exam and pair Research foundation of glasses at the OneSight Vision Center at - Awarded 2012 research grants totaling US$232,500 Oyler School. - Awarded US$40 000 to students pursuing degrees in optometry through the Dr Stanley US$40,000 Dr. Students who see better, learn better. Yet one in better better Pearle Scholarship Fund four students has an undiagnosed vision problem. Sustainable development initiatives That’s why OneSight is pioneering a new school- In October 2012, the OneSight Vision Center at Oyler School opened as the first self- based vision care model in one of the most sustaining school-based vision care program in the United States. Located within a impoverished schools in the United States. The OneSight Vision Center t Oyler School ill O Si ht Vi i C t at O l S h l will school environment, this full-service vision center will provide 3,000 students annually provide 3,000 students with access to with access to comprehensive eye exams, glasses, fittings and adjustments. OneSight is comprehensive vision care annually. partnering with the American Optometric Association to evaluate expansion potential of this new model to address the severe gap in vision care for students in underprivileged iti communities. A long way to grow 63
APPENDIX A long way to grow 64
NOTES ON THE PRESENTATION › 1 Net debt/EBITDA, net debt/adjusted EBITDA, net , j , › 3 Comparable p store sales reflects the change in sales g debt, EBITDA, adjusted EBITDA, adjusted operating from one period to another that, for comparison income, adjusted operating margin, adjusted net purposes, includes in the calculation only stores income, adjusted earnings per share and free cash flow open in the more recent period that also were open are not measures in accordance with IAS/IFRS. For during the comparable prior period, and applies to additional disclosure see the press release titled both periods the average exchange rate for the prior “Luxottica completes 2012 with record results” dated period and the same geographic area. Commencing February 28, 2013 available at www.luxottica.com 2Q12, retail comparable store sales exclude Pearle website under the Investors tab. Vision results which are separately reported. See “retail “ t il comparable store sales” i l d d i thi bl t l ” included in this › 2 Figures at constant exchange rates are calculated appendix. using the average exchange rates in effect during the › 4 Excluding non recurring items corresponding period of the previous year. Please refer to the “ “Major currencies” table in the press release ” › 5 Equals interest income minus interest expenses titled “Luxottica completes 2012 with record results” dated February 28, 2013 available at www.luxottica.com website under the Investors tab. › 6Equals extraordinary income minus extraordinary expenses › 7Net debt figures are calculated using the average exchange rates used to calculate EBITDA figures A long way to grow 65
WHOLESALE SALES BREAKDOWN WHOLESALE SALES BREAKDOWN FOR 4Q12 WHOLESALE SALES BREAKDOWN FOR FY12 Wholesale sales: +9.0%(2) Wholesale sales: +10.0%(2) (Sales breakdown by region, 4Q12)(2) (Sales breakdown by region, FY12)(2) RoW Western RoW Western Europe 13% 37% Europe 12% 40% Emerging Emerging 23% markets 26% markets 24% North America 25% North America YoY changes by region, 4Q12(2) YoY changes by region, FY12(2) Western Europe +5% Western Europe +3% North America +5% North America +15% Emerging markets +19% Emerging markets +19% RoW +11% RoW +9% A long way to grow 66
RETAIL COMPARABLE STORE SALES(3) 4Q12 FY12 Optical North America • LensCrafters +0.8% +2.4% • Licensed Brands +0.8% +3.8% Optical Australia/New Zealand +6.6% +6.3% Sunglass Hut worldwide +10.0% +9.8% Group Retail +4.5% +4 5% +5.8% +5 8% • Pearle Vision total system sales -3.9% -1.9% (Business plan changed from corporate stores to franchising model) A long way to grow 67
NET DEBT(1) EVOLUTION 2,500 ∆ Net debt(1) €370 million (2,032) + 1,476 2,000 (130) (1,669) 7 (1,662) (227) 1,500 (266) (6) (119) 1,000 (365) 500 FCF €720 million 0 Dec. 31, 2011 Operating cash Capex Financial Taxes paid Extraordinary Dividends Acquisitions + Dec. 31, 2012 Translation adj Dec. 31, 2012 flow excl. capex charges reserve Other excl. Translation adj. For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 68
FY 2012 DEBT OVERVIEW Dec. 31, Dec. 31, FY 2011 FY 2012 ∆ 2011 2012 Adj. EBITDA(1) j 1,136 , 1,362 , Net US$ debt(1) $ ( , (1,481) ) ( (814) ) 667 ∆ working capital 13 114 Net € debt(1) (887) (1.045) (158) Capex (307) (365) Translation adj. 7 Operating cash € 1 = US$ 1.2939 1.3194 842 1,111 flow Financial charges(5) (109) (119) Net debt (€) (2,032) (1,662) 370 Taxes paid (229) (266) Net debt/adj. 1.8x 1.2x EBITDA(1)(4) Extraordinary Net debt/adj. (8) (6) charges(6) EBITDA excluding 1.7x 1.2x Free cash flow(1) exchange rate h t 496 720 effect(1)(4)(7) A long way to grow 69
Investor Relations team Alessandra Senici Tel. +39 (02) 8633 - 4662 alessandra.senici@luxottica.com Nicoletta R Ni l tt Russo Tel. +39 (02) 8633 - 4718 nicoletta.russo@luxottica.com Elena Dimichino Tel. +39 (02) 8633 - 4038 elena.dimichino@luxottica.com Elisa Cattaruzza Tel. +39 (02) 8633 - 4870 elisa.cattaruzza@luxottica.com @ www.luxottica.com www luxottica com A long way to grow 70

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Luxottica, A long way to growth - Investors & Analysts presentation

  • 1. Al long way to grow t Milan, Milan March 1, 2013 1
  • 2. FORWARD LOOKING STATEMENT Certain statements in this investor presentation may constitute “forward-looking statements” as defined in the Private p y g Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those which are anticipated. Such risks and uncertainties include, but are not limited to, our ability to manage the effect of the uncertain current global economic conditions on our business, our ability to successfully acquire new businesses and integrate their operations, our ability to predict future economic conditions and changes i consumer preferences, our ability t successfully i t d diti d h in f bilit to f ll introduce and market new products, our d k t d t ability to maintain an efficient distribution network, our ability to achieve and manage growth, our ability to negotiate and maintain favorable license arrangements, the availability of correction alternatives to prescription eyeglasses, fluctuations in exchange rates, changes in local conditions, our ability to protect our proprietary rights, our ability to maintain our relationships with host stores, any failure of our information technology, inventory and other asset risk, a ta ou e at o s ps t ost sto es, a y a u e o ou o at o tec o ogy, e to y a d ot e s , credit risk on our accounts, insurance risks, changes in tax laws, as well as other political, economic, legal and technological factors and other risks and uncertainties described in our filings with the US Securities and Exchange Commission. These forward-looking statements are made as of the date hereof, and we do not assume any obligation to update them. This investor presentation contains measures that were not prepared in accordance with IAS/IFRS. For a reconciliation of non-IAS/IFRS measures used in these materials, see the Company’s press release titled “Luxottica completes 2012 with record results” dated February 28, 2013, available on www.luxottica.com Luxottica results website under the Investors tab.
  • 3. FY 2012 RECORD RESULTS Continuing to fuel C ti i t f l profitable and sustainable growth, fit bl d t i bl th backed by a solid balance sheet › All-time high sales: €7 billion (+14% Y-o-Y) All time Y o Y) • Solid North America driven by excellent execution • Sound Western Europe • Emerging markets leading the way • Astonishing execution in Australia › Strong Group operating leverage: +100bps • Adj. operating income(1) over €1 billion (+22.3%) › Breaking another record: free cash flow(1) g generation, in excess of €700 million › Deleveraging continues: net debt/EBITDA(1)(2) at 1 25x 1.25x › Dividend proposal of €0.58 vs. €0.49 in 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 3
  • 4. FY 2012 DYNAMIC GROWTH ACROSS GEOGRAPHIES North America Western Europe Emerging markets +6% +4%(2) +26%(2) US$ For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 4
  • 5. FY 2012 RESULTS Enrico Cavatorta A long way to grow 5
  • 6. ALL-TIME HIGH SALES FY12 4Q12 +13.9% +8.2% At constant f t t forex(2) At constant forex(2) t tf +7.5% +5.1% Wholesale at constant forex(2) Wholesale at constant forex(2) +10.0% +9.0% Retail comps(3) Retail comps(3) +5.8% +4.5% For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 6
  • 7. OPERATING INCOME Showing Sh i continuous i ti improvements t FY12 Group 4Q12 Group (€ mn) adjusted(1)(4) (€ mn) • +90bps @ constant forex(2) • Best margin since 2007 10.0% 14.2% 13.2% 13 2% 164 1,004 9.2% 821 139 FY 2011 FY 2012 4Q 2011 4Q 2012 FY12 Wholesale (€ mn) FY12 Retail adjusted(1)(4) (€ mn) • +50bps @ constant forex(2) • Details on slide 11 21.8% 13.3% • Tecnol dilution 60bps 11.9% 21.5% 604 574 529 449 FY 2011 FY 2012 FY 2011 FY 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 7
  • 8. NON-RECURRING ITEMS IN 2012 Impact on Group Impact on Group operating income net income (€ mn) (€ mn) Australian retail reorganization -21.7 -15.2 • Restructuring costs related to the reorganization of the optical retail stores located in Australia and New Zealand (impact on 1Q12) Extraordinary tax accrual - -10.0 • Accrual for tax audit of fiscal year 2007 A long way to grow 8
  • 9. STRONG FCF(1) GENERATION DRIVING DELEVERAGE Strengthening financial profile St th i fi i l fil Net debt(1) (€ mn) Net debt/EBITDA(1) (@ c.fx(2)) from 1.7x to 1.25x, after: 2.032 • €227 million dividend payment 1.662 • €130 million invested in acquisitions FY 2011 FY 2012 • Despite increased capex from €307 million to Free cash flow(1) (€ mn) €365 million 720 496 FY 2011 FY 2012 ∆ days Operating working capital (€ mn) • DSO -2 2 • DSI +7 (inventory build up at year end due to 39 SAP go-live in Italian factories) -7 • DPO +2 FY 2011 FY 2012 A long way to grow 9
  • 10. RESULTS IN LINE WITH 2012 “RULE OF THUMB” % growth vs. FY11 (@ current forex) (@ constant forex(2)) ) SALES GROWTH HIGH SINGLE-DIGIT +14% +7% ADJUSTED OPERATING INCOME(1) 2x SALES GROWTH +22% +15% ADJUSTED NET INCOME(1) 2x SALES GROWTH +24% +16% APPROACHING NET DEBT/EBITDA(1) 1.4 – 1.5x 1.25x For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 10
  • 11. RETAIL MARGINS EVOLUTION
 Solid S lid margin i i improvement i 2012 t in FY 2011 FY 2012  bps Adjusted retail 11.9% 13.3% +140 US$ from 1.39 to • Excluding forex - -40bps 1.28 Adjusted retail j 11.9% 11 9% 12.9% 12 9% +100 @ constant forex(2) GMO, Tecnol, • Excluding Latam and Iberia expansion +10bps +40bps Sunglass Hut Latam and Iberia Adjusted “core” retail 12.0% 13.3% +130 @ constant forex (2) A long way to grow 11
  • 12. 2013 “RULE OF THUMB” SALES GROWTH HIGH SINGLE-DIGIT(2) OPERATING INCOME/ 2x SALES GROWTH(2) NET INCOME NET DEBT/EBITDA BELOW 1.00x 1 00 Entering 2013: › Tough comparison with 1Q12 by far the best quarter in 2012 1Q12, › Unfavorable exchange rate effect vs. 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 12
  • 13. BEHIND THE RULE OF THUMB Andrea Guerra A long way to grow 13
  • 14. REVENUE ROADMAP BY GEOGRAPHY North America Western Europe Emerging markets olesale(2) +20-30% +10-15% +18% +19% +15% +15% +4-7% Who +6% +3% 2011 2012 2013E 2011 2012 2013E 2011 2012 2013E 2012 includes Tecnol North America OPSM Australia Emerging markets +10-15% +10 15% Retail(3) +4-5% +6-8% +16% +11% +6% +10% +5% +4% 2011 2012 2013E 2011 2012 2013E 2011 2012 +15 2013E -18% Total sales: +76% 2011 & +51% 2012 For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 14
  • 15. 2013 BRAND PORTFOLIO Further F th growth ahead th h d Premium and Launching g Ray-Ban R B Oakley O kl luxury Armani High i l di it Hi h single-digit Double-digit D bl di it growth th Strong d bl di it St double-digit Targeting €130 T ti growth growth; million in sales recently launched the Atelier division A long way to grow 15
  • 16. SECULAR GROWTH DRIVERS FUELING LONG-TERM EYEWEAR EXPANSION Andrea Guerra A long way to grow 16
  • 17. SECULAR GROWTH DRIVERS Demographics l di th way, h D hi leading the heavily supported b mega t d il t d by trends DEMOGRAPHICS PENETRATION PREMIUMIZATION EMERGING MARKETS NEW CHANNELS GATEWAY & MEGA CITIES A long way to grow 17
  • 18. DEMOGRAPHIC CATALYSTS 
 Under-corrected i d t U d t d industry • Growing population • Ageing population • Increased need for eye correction due to behavioral 7.7bn global changes population 7bn 7b global population 4.8bn require vision 4.2bn correction require vision correction 2.2bn 1.7bn 1 7b vision vision correction correction wearers wearers 2011 2020E Additional 500 million vision correction wearers by 2020 Source: Industry data and company estimates A long way to grow 18
  • 19. PENETRATION
 Significantly under-penetrated category Si ifi tl d t t d t › Developed markets opportunities Market growth 2020 • Highly fragmented industry • Still under-educated eyewear consumers • US sun premium market significantly 2012 below European level Developed markets optical › Emerging markets opportunities Developed markets sun • Increasing standards of living Emerging markets optical • Highly under-educated eyewear consumers Emerging markets sun Eyewear market penetration Eyewear: an industry in its infancy Source: Industry data and company estimates A long way to grow 19
  • 20. PREMIUMIZATION Accessories d i i l A i driving luxury consumption ti › Accessories to outperform the luxury WORLDWIDE LUXURY MARKET CAGR 11-14 industry › Eyewear undergoing structural €240 bn Total +7-9% perception changes: from medical Others +8-9% €190 bn devices to fashion accessories Perfume • Shortening replacement cycle & cosmetics +3-5% • Multiple purchases Accessories +9-11% Apparel +5-7% 2011 2014E Eyewear: the smallest and fastest growing category within accessories Source: Fondazione Altagamma and company estimates A long way to grow 20
  • 21. EMERGING MARKETS The ld Th golden age h yet t come has t to 2011 WEIGHT OF EMERGING MARKETS Different stages of development across emerging markets Luxury & consumer goods Eyewear › Prescription backbone • Emerging markets lacking 48% 48% 43% infrastructure 37% • Under-educated eyewear 19% 16% consumers Experiential Fragrances Personal luxury Premium Premium Premium › Sunglasses a category to luxury skincare sunglass prescription discover Eyewear: early stage of development, waiting for the big wave Source: Industry data and company estimates A long way to grow 21
  • 22. EMERGING MARKETS Increased opportunities to capture additional share of wallet I d t iti t t dditi l h f ll t THE BIG & FAST GROWING EMERGING MARKETS Population GDP CAGR › Driving world 2012 million 2012-2016E GDP 7.8 LUXOTTICA NEXT China 1,329 3.7 THREE YEARS Brazil 195 7.2 CAGR India 1,220 1 220 › Ri i upper Rise in +15-20% 15 20% Turkey 75 4.9 middle class Mexico 115 3.7 consumers NEW EMERGING MARKETS Population GDP CAGR 2012 million 2012-2016E › Proliferation of Indonesia 248 6.5 luxury stores Philippines 104 6.0 and rising Vietnam 90 6.5 LUXOTTICA NEXT consumer 4.8 THREE YEARS Thailand 69 CAGR 5.2 brand Malaysia 29 +20-30% Taiwan a a 23 3 3.5 awareness Andes Region 50 5.3 Russia 143 3.9 Premium eyewear currently a “drop in the ocean” Source: Industry data and company estimates A long way to grow 22
  • 23. DEPARTMENT STORES The i t f f Th point of reference for premium consumers f i SALES/SQM PER CATEGORY › Sunglasses sales/sqm growing fast fast, despite limited space allocation € thousands/sqm 18-30 • Ranking 10th in space allocation per category vs. 20th three years ago 12-18 13-16 • <1% of department stores sales vs. >25% for each other category › Luxottica selling now to over 2,000 4-8 doors, expected to more than double by 2015 › Growth spurt coming from emerging Sunglass Wholesale Sunglass, directly Perfumes & cosmetics Clothing & apparel markets managed % Retail space 0.3-0.5% 1-2% 20-30% 40-50% allocated Sun: from seasonal to permanent display in a US$200 billion market Source: Industry data and company estimates A long way to grow 23
  • 24. TRAVEL RETAIL, INDULGING WHILE TRAVELING <1% space allocated t eyewear vs. approx. 50% f perfumes & cosmetics 1% ll t d to for f ti 2005-2010 SALES GROWTH IN TRAVEL RETAIL 200 Sales growth index Sunglasses (2005 100) (2005=100) 180 Stationery 160 Beauty Electronics Watches 140 Liquors 120 Tobacco 100 2005 = 100 2005 2006 2007 2008 2009 2010 Sun: the fastest growing category in a US$45 billion market Source: Industry data and company estimates A long way to grow 24
  • 25. A NEW PLAYING FIELD: GATEWAY & MEGA CITIES Urbanization, a wealth of opportunities f premium eyewear U b i ti lth f t iti for i Amsterdam London Beijing Berlin Moscow Tianjin Zurich Wuhan Chicago Paris San Francisco Milan Istanbul New York City Barcelona Delhi Chongqing Seoul Las Vegas Chengdu Tokyo Ahmedabad Los Angeles Cairo Dubai Shanghai Miami Riyadh Calcutta Hong Kong Surat Mexico City Abu Dhabi Yangon Manila Mumbai Foshan Shenzhen Dongguan Chennai Ch i Guangzhou Singapore Jakarta Lima Rio de Janeiro São Paulo Mega cities Gateway cities Buenos Aires Cape Town Sydney Source: Industry data and company estimates A long way to grow 25
  • 26. LUXOTTICA TOP TEN FOCUS CITIES Population GDP / cap growth cap. MEGA CITY 2011 million CAGR / ‘11-17E Delhi 23 4.6 Mexico C ty e co City 20.5 05 1.9 LUXOTTICA NEXT 3 Shanghai 20.5 6.4 YEARS CAGR São Paulo 20 2.6 +30-40% Mumbai 19.5 4.7 Jakarta 19.5 5.0 GATEWAY CITY London 13 1.3 New York City 19 1.8 LUXOTTICA NEXT 3 YEARS CAGR Paris 12 0.6 +15-20% Los Angeles 13 2.2 Source: Industry data and company estimates A long way to grow 26
  • 27. SHAPING THE INDUSTRY External drivers supporting L E t ldi ti Luxottica’s effective execution on growth engines tti ’ ff ti ti th i DEMOGRAPHICS OPTICAL PENETRATION EMERGING MARKETS PREMIUMIZATION OAKLEY EMERGING MARKETS SUNGLASS HUT NEW CHANNELS NORTH AMERICA GATEWAY AND MEGA CITIES A long way to grow 27
  • 28. RELENTLESS OPTICAL EXPANSION FUELING RESILIENT GROWTH
 Paolo Pezzutto A long way to grow 28
  • 29. RELENTLESS OPTICAL EXPANSION Fueling F li resilient growth ili t th › Demographics and behavioral changes driving market growth › Health benefit still overriding emotional benefit • Only 1/4 of wearers consider optical frames as a fashion accessory y › Luxottica underpenetrated in the optical segment t • 2/3 of global eyewear market is optical vs.1/3 for Luxottica (based on units sold) Optical represents an untapped opportunity A long way to grow 29
  • 30. BUILDING OPTICIANS’ TRUST THROUGH SERVICE EXCELLENCE A “solution provider” and a partner f opticians “ l ti id ” d t for ti i › Strategizing offer and service through organizational evolution • Dedicated optical department since 2010 • LuxLab: innovative technical solutions to facilitate lens mounting g • New “Atelier division” boosting creativity in optical › Continuing to invest in after-sale services • More efficient spare parts and repair management through authorized local service centers - 94% of spare p orders ship within 5 days ( p part p y (86% in 2010) ) • New on-line back-up support: brand information, shipment tracking and re-orders Proximity, on time and more connection A long way to grow 30
  • 31. BUILDING OPTICIANS’ TRUST VIA TARGETED PRODUCT INITIATIVES Resizing R i i product strategy and collection architecture d t t t d ll ti hit t › More design and development centered on development-centered optical collections • Prada “optical capsule collection” • Conveying PR messages on optical experience › Extreme focus on style and fitting • Stylistic features addressing local trends • Technical features addressing different fitting g g needs in Asia Comfortably stylish… adapting to our customers’ needs A long way to grow 31
  • 32. RAY-BAN First Fi t ever optical collection dates back to 2003 ti l ll ti d t b k t › Optical wholesale sales outperforming sun: 100% 1937-2003 Sun >30% CAGR 2009-2012 • Consolidated consumer-oriented segmentation offering targeted solutions 25% 70% Optical › Ray-Ban emerging markets collections with y g g 2012 75% dedicated PR and marketing activities since Sun 2010 • Internationally launched styles in 2012: 54% of which >40% are available with Asian fitting 60-65% • Local design collections for China, Southeast 35-40% Sun Asia d India: A i and I di 46% styles t l 2016 Optical - Now launching the first locally designed 30% collection in Brazil A long way to grow 32
  • 33. THE RISING WAVE OF EMERGING MARKETS Paolo Alberti A long way to grow 33
  • 34. 2012 DRIVING FORCE, EMERGING MARKETS Unmatched geographical presence U t h d hi l › Leading market position at early stages of industry development › Relentless growth in both divisions: +26%(2) • 13% of Group sales • B t wholesale performers: B il Chi Best h l l f Brazil, China, Eastern Europe, India, Mexico and Turkey • Latin America sprinting ahead in the retail division: Sunglass Hut Mexico comps(3) +29% and GMO comps(3) +9% Emerging markets approaching 20% of Group sales by 2016 A long way to grow 34
  • 35. LEVERAGING THE BRAZILIAN PLATFORM Integration completed successfully I t ti l t d f ll › 2012 eyewear sales up by 48%(2) • Brazil already the fourth largest wholesale market in 2012 › State-of-the-art manufacturing processes › Boosting international collections & localized production IMMAGINE G • Successful launch of Vogue “Made in Brazil” › New commercial organization and stronger supply chain driving further penetration and improving service level p g A long way to grow 35
  • 36. EXPANDING THE BRAZILIAN PLATFORM “Premiumizing” th eyewear i d t “P i i i ” the industry › Doubling eyewear sales over the next five years • Attracting fast growing premium customers • Improving doors segmentation • Investing to double production capacity by 2015 › Ready for Ray-Ban & Arnette launch in March and Oakley by year-end › Profitability enhancer from 2013 The second biggest wholesale market by 2015 A long way to grow 36
  • 37. SURFING THE RISING WAVE OF EMERGING MARKETS India: further I di f th consolidating our presence lid ti › Early entrance helped build a solid market share • Ray-Ban brand awareness is among the highest in the world › Doubling production capacity for Ray-Ban and Vogue Indian collections g › 2013-2016 expected wholesale sales growth at >20% CAGR • Sales CAGR in past three years: >30% › Sunglass Hut expansion continuing: now 40 stores, one in every premium mall A long way to grow 37
  • 38. SURFING THE RISING WAVE OF EMERGING MARKETS Southeast Asia: th next emerging markets to tackle S th t A i the t i k t t t kl › Leveraging Singapore hub to further expand the business › Wholesale sales +30% CAGR in the last four years Vietnam Taiwan › Accelerating investments Thailand Philippines • Planning direct presence in Indonesia Malaysia y and Th il d d Thailand • Accelerating Malaysia, Vietnam and Philippines Indonesia Sales expected to double by 2015 A long way to grow 38
  • 39. SURFING THE RISING WAVE OF EMERGING MARKETS China: h i ht i l Chi heightening local execution l ti › A recognized leader in the premium segment • Wholesale sales almost doubled yearly since 2010 - Sales expected to grow at >40% CAGR in the next three years - China to become #10 market by 2014 › Consolidating optical retail excellence in China • Adding approx. 40 LensCrafters stores › Expanding production capacity • Building a new 37,000sqm production site A long way to grow 39
  • 40. OAKLEY’S LONG JOURNEY: A COMPELLING OPPORTUNITY 
 Colin Baden A long way to grow 40
  • 41. 2012 HIGHLIGHTS › Another year of double-digit growth › Maintaining Oakley’s strong brand momentum • Olympics increased brand visibility and awareness • Unified & global brand campaign launch: Beyond R B d Reason • Powerhouse of global and regional athletes A long way to grow 41
  • 42. 2013 AND BEYOND: DOUBLE-DIGIT OPPORTUNITIES Balanced growth across products and regions B l d th d t d i OPTICAL WOMEN EUROPE EMERGING MARKETS A long way to grow 42
  • 43. OPTICAL: A WORLD OF OPPORTUNITIES A very l long-term strategic focus t t t i f › 4th year in a row of double digit growth double-digit • Crosslink: successfully created a new sport optical segment for men › Created best-in-class service around revolutionary ideas › Elevating in store experience through training • Oakley destinations with frame boards, improved assortments and merchandising • Improving sales tools › New product innovations on the way Doubling optical sales in three years A long way to grow 43
  • 44. EXPLORING THE WOMAN’S WORLD Beautifully b l B tif ll balancing style and performance i t l d f › Fast growing opportunity › Building momentum in key North American regions › Growing strategic partnerships to drive in- in store presence & brand awareness • New destination areas within O stores • Launching exclusive products with Sunglass Hut Kerri Walsh, Beach Volleyball • Targeted advertising campaigns within key regions Expanding segment A long way to grow 44
  • 45. ENSURING SUSTAINABLE AND PROFITABLE GROWTH IN EUROPE
 Building B ildi momentum t › In 2012, brand awareness up 4 10% across 2012 4-10% Europe › Invest in the brand with simple and compelling stories & point of sales improvements • Create consistent consumer experiences across p touch points • Gain valuable retail space at point of sales • F Focus on store staff training t t ff t i i › Strengthen position in eyewear and goggles › Grow within selective distribution channels Expecting double digit growth in Europe between 2013-2015 A long way to grow 45
  • 46. DEVELOPING BRAND STRENGTH IN EUROPE Continue t engage and b ild relationships with consumers C ti to d build l ti hi ith Active lifestyle sun/optical Sport performance sun/optical Snow goggles A long way to grow 46
  • 47. THE EMERGING MARKETS FIELD Establishing localized strategies E t bli hi l li d t t i › Emerging markets currently represent approx. 12% of Oakley’s sales › Strengthening presence in China, India, South Korea and Brazil • Continue to develop brand awareness and positioning • Deliver top performing Oakley styles with Asian fit • Strengthening focus in optics in Brazil Asian business to double in three years A long way to grow 47
  • 48. DESIGN & INNOVATION TO SUPPORT NEW PRODUCT RELEASES
 Always at the forefront in sport & performance Al t th f f t i t f › Balance of iconic and casual styles › New materials & techniques: carbon fiber, titanium hi tit i hinges, aluminum l i › Line extensions that reach new customers › Styleswitch – first lifestyle product with Switchlock technology › Crosslink Switch – interchangeable lens carrier technology › Lens storytelling for different environments A long way to grow 48
  • 49. DIGITAL INNOVATION REINVENTS SNOW EXPERIENCE
 Oakley i O kl airwave snow goggle l › Airwave snow goggle with heads up display heads-up integrates the following technologies: • Bluetooth connectivity • GPS • Resort mapping • Buddy tracking • Onboard apps • Apple iPhones and Android operating system smart phones capabilities - caller ID and text messaging A long way to grow 49
  • 50. SUNGLASS HUT: ENGAGING GLOBAL CUSTOMERS
 Fabio d’Angelantonio A long way to grow 50
  • 51. CELEBRATING ANOTHER YEAR OF GLOBAL GROWTH Sunglass H t “th sun experience” S l Hut “the i ” › €1 billion sales (+12 8% at constant forex(2)) (+12.8% • Worldwide comps(3): +9.8% • North American comps(3): +10.1%, double-digit g p g growth for the third consecutive year • Conversion driving volumes and mix driving AUR › Strong improvement in profitability › Global expansion moving ahead • Strengthening in the sunbelt • Entrance in Spain & Portugal A long way to grow 51
  • 52. GLOBAL LEADING RETAIL BRAND Winning through enhanced S Wi i th h h d Sunglass H t experience l Hut i › Sunglass Hut sells FEEL GOOD! • It’s all about delighting consumers • Brands celebration and training › Strong & effective organization and operating model • Global “360° SunglassHutization” with a local touch › Working on digital convergence • E-com • Omni-channel • Storytelling A long way to grow 52
  • 53. GLOBAL GROWTH IS UNDERWAY On t k t O track to manage 4,000 stores b 2015 4 000 t by › Strengthening penetration in the sunbelt • Focus on Mexico, Brazil and India • New channels: E-com, department stores, travel retail › The next frontier for expansion: Latam, Southern Europe, Asia Turkey Iberia Mexico India Middle East Brazil Targeting €2 billion sales by 2016 A long way to grow 53
  • 54. WINNING IN MEXICO › The biggest sun chain • Approx. 90 stores in 20 cities • Good presence in airports and tourist areas • +29% comps(3) in 2012 • North America “halo” effect on the brand › +40% sales CAGR by 2015, highly p profitable › Adding 100 stores by 2015 • Exploring department store channel A long way to grow 54
  • 55. WINNING IN BRAZIL Getting G tti ready for upcoming FIFA World Cup and Ol d f i W ld C d Olympics i › Greenfield start up • Over 20 stores opened in 15 months › Store network • Expecting to double store network in 2013 • Reaching 5-6x of current level by 2016 • Sales to accelerate exponentially • Exploring franchising model A long way to grow 55
  • 56. WINNING IN INDIA › Strong franchising partnership • 40 stores in 17 cities, including Mumbai, Delhi and Kolkata › +30% CAGR sales by 2015 › 100 stores by 2015 • Exploring department store and mall expansion • Soon opening flagship store in Delhi A long way to grow 56
  • 57. NORTH AMERICA: FURTHER BENEFITING FROM A UNIQUE MIX OF ASSETS
 Mark Weikel A long way to grow 57
  • 58. LEVERAGING A UNIQUE MIX OF ASSETS IN 2012
 More synergies t come M i to › Solid sales growth in North America: +6% in US$(1) • Strong sales growth in wholesale : +15% in US$(1) • Total North America retail comps(3): +6% › Synergizing wholesale and retail activities › Evolving retail organization • New leadership at Retail Optical North America A long way to grow 58
  • 59. NORTH AMERICA: DRIVING CATEGORY GROWTH Focusing on customers & consumers through even stronger collaboration F i t th h t ll b ti RONA Lux US Wholesale Lab Network A long way to grow 59
  • 60. INVESTING IN BRAND EXPERIENCE @ LensCrafters LensCrafters will continue t elevate th b d i 2013 L C ft ill ti to l t the brand in …more emotional …celebrity …vibrant …a greater …lens imagery… endorsement… storytelling... focus on sun… leadership A long way to grow 60
  • 61. LENSCRAFTERS Amplifying A lif i our connection with customers via enabling i t ti ith t i bli in-store technology t h l A long way to grow 61
  • 62. 2013 AND BEYOND Winning in the Wi i i th marketplace k t l “Luxottica expects sustainable sales growth & ongoing margin i i i improvement t by leveraging the industry’s strong secular drivers through effective execution of growth engines” A long way to grow 62
  • 63. ONESIGHT OneSight is an independent nonprofit organization providing sustainable access to quality vision care and eyewear in underserved communities worldwide. Since 1988, OneSight has given the gift of sight to more than eight million people in 37 countries and has granted millions to fund optical research and education. Thanks to generous annual operating support and skilled volunteers from Luxottica, public donations to OneSight directly fund programs to provide healthy vision for millions more in need. 2012 results Vision care programs -S Served 243 108 adults and children th d 243,108 d lt d hild through more th 90 vision clinics and community h than i i li i d it Learning to read becomes possible for this first- programs across 6 continents grader after receiving his first eye exam and pair Research foundation of glasses at the OneSight Vision Center at - Awarded 2012 research grants totaling US$232,500 Oyler School. - Awarded US$40 000 to students pursuing degrees in optometry through the Dr Stanley US$40,000 Dr. Students who see better, learn better. Yet one in better better Pearle Scholarship Fund four students has an undiagnosed vision problem. Sustainable development initiatives That’s why OneSight is pioneering a new school- In October 2012, the OneSight Vision Center at Oyler School opened as the first self- based vision care model in one of the most sustaining school-based vision care program in the United States. Located within a impoverished schools in the United States. The OneSight Vision Center t Oyler School ill O Si ht Vi i C t at O l S h l will school environment, this full-service vision center will provide 3,000 students annually provide 3,000 students with access to with access to comprehensive eye exams, glasses, fittings and adjustments. OneSight is comprehensive vision care annually. partnering with the American Optometric Association to evaluate expansion potential of this new model to address the severe gap in vision care for students in underprivileged iti communities. A long way to grow 63
  • 64. APPENDIX A long way to grow 64
  • 65. NOTES ON THE PRESENTATION › 1 Net debt/EBITDA, net debt/adjusted EBITDA, net , j , › 3 Comparable p store sales reflects the change in sales g debt, EBITDA, adjusted EBITDA, adjusted operating from one period to another that, for comparison income, adjusted operating margin, adjusted net purposes, includes in the calculation only stores income, adjusted earnings per share and free cash flow open in the more recent period that also were open are not measures in accordance with IAS/IFRS. For during the comparable prior period, and applies to additional disclosure see the press release titled both periods the average exchange rate for the prior “Luxottica completes 2012 with record results” dated period and the same geographic area. Commencing February 28, 2013 available at www.luxottica.com 2Q12, retail comparable store sales exclude Pearle website under the Investors tab. Vision results which are separately reported. See “retail “ t il comparable store sales” i l d d i thi bl t l ” included in this › 2 Figures at constant exchange rates are calculated appendix. using the average exchange rates in effect during the › 4 Excluding non recurring items corresponding period of the previous year. Please refer to the “ “Major currencies” table in the press release ” › 5 Equals interest income minus interest expenses titled “Luxottica completes 2012 with record results” dated February 28, 2013 available at www.luxottica.com website under the Investors tab. › 6Equals extraordinary income minus extraordinary expenses › 7Net debt figures are calculated using the average exchange rates used to calculate EBITDA figures A long way to grow 65
  • 66. WHOLESALE SALES BREAKDOWN WHOLESALE SALES BREAKDOWN FOR 4Q12 WHOLESALE SALES BREAKDOWN FOR FY12 Wholesale sales: +9.0%(2) Wholesale sales: +10.0%(2) (Sales breakdown by region, 4Q12)(2) (Sales breakdown by region, FY12)(2) RoW Western RoW Western Europe 13% 37% Europe 12% 40% Emerging Emerging 23% markets 26% markets 24% North America 25% North America YoY changes by region, 4Q12(2) YoY changes by region, FY12(2) Western Europe +5% Western Europe +3% North America +5% North America +15% Emerging markets +19% Emerging markets +19% RoW +11% RoW +9% A long way to grow 66
  • 67. RETAIL COMPARABLE STORE SALES(3) 4Q12 FY12 Optical North America • LensCrafters +0.8% +2.4% • Licensed Brands +0.8% +3.8% Optical Australia/New Zealand +6.6% +6.3% Sunglass Hut worldwide +10.0% +9.8% Group Retail +4.5% +4 5% +5.8% +5 8% • Pearle Vision total system sales -3.9% -1.9% (Business plan changed from corporate stores to franchising model) A long way to grow 67
  • 68. NET DEBT(1) EVOLUTION 2,500 ∆ Net debt(1) €370 million (2,032) + 1,476 2,000 (130) (1,669) 7 (1,662) (227) 1,500 (266) (6) (119) 1,000 (365) 500 FCF €720 million 0 Dec. 31, 2011 Operating cash Capex Financial Taxes paid Extraordinary Dividends Acquisitions + Dec. 31, 2012 Translation adj Dec. 31, 2012 flow excl. capex charges reserve Other excl. Translation adj. For additional disclosures regarding information in this presentation, please see “Notes on the presentation” in the Appendix A long way to grow 68
  • 69. FY 2012 DEBT OVERVIEW Dec. 31, Dec. 31, FY 2011 FY 2012 ∆ 2011 2012 Adj. EBITDA(1) j 1,136 , 1,362 , Net US$ debt(1) $ ( , (1,481) ) ( (814) ) 667 ∆ working capital 13 114 Net € debt(1) (887) (1.045) (158) Capex (307) (365) Translation adj. 7 Operating cash € 1 = US$ 1.2939 1.3194 842 1,111 flow Financial charges(5) (109) (119) Net debt (€) (2,032) (1,662) 370 Taxes paid (229) (266) Net debt/adj. 1.8x 1.2x EBITDA(1)(4) Extraordinary Net debt/adj. (8) (6) charges(6) EBITDA excluding 1.7x 1.2x Free cash flow(1) exchange rate h t 496 720 effect(1)(4)(7) A long way to grow 69
  • 70. Investor Relations team Alessandra Senici Tel. +39 (02) 8633 - 4662 [email protected] Nicoletta R Ni l tt Russo Tel. +39 (02) 8633 - 4718 [email protected] Elena Dimichino Tel. +39 (02) 8633 - 4038 [email protected] Elisa Cattaruzza Tel. +39 (02) 8633 - 4870 [email protected] @ www.luxottica.com www luxottica com A long way to grow 70