EssilorLuxottica, the parent company of popular eyewear brands Oakley and Ray-Ban, has reported a significant decline in sales during the first quarter of 2020, largely due to the impact of the coronavirus pandemic. This has resulted in the company taking measures such as suspending its dividend and scrapping its 2020 outlook.

During the first quarter, EssilorLuxottica’s revenue fell by 10.1% to 3.78 billion euros ($4.12 billion) compared to the previous year. The company has also warned that the situation is likely to worsen in the second quarter, as the effects of the crisis continue to impact sales and profitability.

The sunglasses market has been particularly affected by the decline in sales, as the lockdown measures implemented in many countries have limited people’s activities and reduced the demand for sunglasses. However, the company remains optimistic about the future, as it believes that the need for better vision is a long-term and structural demand that will rebound once the crisis subsides.

A positive sign for EssilorLuxottica is the recovery in sales of prescription lenses in China. Since the end of April, sales in China have started to grow again as the country begins to return to normalcy. This is significant for EssilorLuxottica, as China is an important market for the company and contributes significantly to its sales.

Besides the decline in sales, EssilorLuxottica is also facing antitrust scrutiny for its bid to acquire opticians group GrandVision for 7.2 billion euros. GrandVision reported a 4.4% decline in first-quarter sales due to the virus. The potential impact of this acquisition on competition in the eyewear market is currently being examined by regulatory authorities.

Despite the current challenges, EssilorLuxottica remains hopeful that it can propose a special dividend by the end of 2020 if the recovery after the pandemic is solid. The company’s strong brand portfolio, which includes luxury brands like Chanel, Prada, and Versace, positions it well to capitalize on pent-up demand once the crisis fades.

As the world continues to navigate the uncertainties brought about by the coronavirus pandemic, EssilorLuxottica is focused on weathering the storm and positioning itself for future growth. With its strong market presence and commitment to innovation, the company remains confident in its ability to rebound and thrive in the post-crisis era.

Sources:
Reuters: EssilorLuxottica suspends 2020 dividend, scraps outlook, postpones shareholder meeting
CNBC: Ray-Ban owner EssilorLuxottica suspends 2020 dividend, scraps outlook amid coronavirus pandemic impact