EssilorLuxottica, the parent company of Ray-Ban, has made the decision to scrap its financial guidance and expects to face a blow to its second-quarter profit due to the ongoing coronavirus crisis. As a result of the pandemic, the eyewear maker has suspended production at selected sites and put certain investments on hold. The full impact of COVID-19 on the company is uncertain, leading EssilorLuxottica to retract its previous guidance. It anticipates a further decrease in revenue and a significant impact on profitability during the second quarter.
Earlier this year, EssilorLuxottica forecasted a growth in sales of 3% to 5% for 2020. However, the current circumstances have forced the company to implement a contingency plan, which includes measures to control costs, manage cash flow, and adjust global capacity to meet the current demand. Despite facing immediate challenges, Executive Vice-Chairman Hubert Sagnieres remains positive about the company’s ability to recover once the crisis is resolved. He emphasizes the resilient nature of the optics business, as people will always need new eyeglasses or contact lenses when their vision changes.
Sagnieres also recognizes the importance of reopening stores in countries like Italy, Spain, and France, as EssilorLuxottica’s business heavily relies on physical retail. Additionally, the company is expanding its e-commerce operations to adapt to the changing market dynamics. EssilorLuxottica asserts that it is in a strong financial position, starting the year with 6 billion euros ($6.6 billion) in cash and having the option to access a further 4 billion euros if necessary.
Currently, the company’s plants in France and Italy are temporarily closed. However, production continues at reopened factories in China, as well as at smaller laboratories and workshops in other locations. The decision on whether to cancel the dividend has not been made yet, but pressure from unions in France may push EssilorLuxottica to forgo shareholder payments during the pandemic.
Overall, EssilorLuxottica remains cautious but adaptable in navigating the challenges brought about by the coronavirus crisis. With a contingency plan in place, the company aims to protect its financial stability and adjust its operations accordingly. Despite the immediate setbacks, EssilorLuxottica anticipates a strong rebound in the future as consumer demand picks up and physical stores reopen.