Luxottica Group conference call transcript, 900 million frames to 1.2 billion frames

**Chris Ryser** · 08-13-2015, 03:02 AM

Luxottica Group conference call transcript
Event: Investor and analyst presentationDate: March 3, 2015

CORPORATE PARTICIPANTS:Alessandra Senici, Leonardo Del Vecchio, Adil Mehboob,-KhanMassimo, VianPaolo, AlbertiNicola, Brandolese, Fabio d’Angelantonio, Q&A

First, let’s talk about what legitimizes our ambition to continue on a steady growth pattern. The first,of course, is that we operate in a structurally growing industry. In the next five years we expect a30% growth in the market, from 900 million frames to 1.2 billion frames. That is more or less thegrowth that we have seen in the past ten years, so it is not only growth, it is an acceleration of thepace of growth; in the next five years, the same growth we saw in the past ten.

Very interesting and you can read all of it at: ======>

http://www.luxottica.com/sites/luxot...anscript_2.pdf

**drk** · 08-13-2015, 09:58 AM

It is likely that the overlords of the optical universe, Essilor and Luxottica, are trying to "grow the market, grow the market".

I think they will:
1. Try to get every person on planet earth wearing glasses.
2. Try to get every person wearing glasses to get lots of glasses.

Pretty straightforward objective.

But how do they plan to do that? What would be their strategy and tactics?

**Dr. Bill Stacy** · 08-13-2015, 10:04 AM

A start would be to convince everyone they need blue protection.

**drk** · 08-13-2015, 10:52 AM

Exactly, Bill.

And let's trot out the traditional "computer vision syndrome" while we're at it.

**MikeAurelius** · 08-13-2015, 11:15 AM

And while we are at it, we don't need yellow in the spectrum, and that horrendous color, fuscia, let's get rid of that as well.

**Robert Martellaro** · 08-13-2015, 11:38 AM

Originally Posted by drk

It is likely that the overlords of the optical universe, Essilor and Luxottica, are trying to "grow the market, grow the market".

I think they will:
1. Try to get every person on planet earth wearing glasses.
2. Try to get every person wearing glasses to get lots of glasses.

Pretty straightforward objective.

But how do they plan to do that? What would be their strategy and tactics?

It's not clear how they plan to increase unit sales, beyond market growth in general, but "sweetening the mix" seems clear enough- hi-tech with high prices, resulting in increased margins.

**newguyaroundhere** · 08-13-2015, 11:39 AM

Originally Posted by Robert Martellaro

It's not clear how they plan to increase unit sales, beyond market growth in general, but "sweetening the mix" seems clear enough- hi-tech with high prices, resulting in increased margins.

They still have the agreements with Google Glass and Intel for hi tech eyewear so that would seem to be the next logical step

**drk** · 08-13-2015, 12:32 PM

I think, I think, I think...

That they will be lowering prices per unit in order to sell more.

**Dr. Bill Stacy** · 08-13-2015, 12:34 PM

The one and only thing I agree with them about is everyone needs glasses for one thing or another, and the more pairs, the better. And the more expensive the better. I finally see how this capitalism thing works, and I kinda like it.

**Chris Ryser** · 08-13-2015, 12:54 PM

Originally Posted by Dr. Bill Stacy

The one and only thing I agree with them about is everyone needs glasses for one thing or another, and the more pairs, the better. And the more expensive the better. I finally see how this capitalism thing works, and I kinda like it.

Over the past few years, many glasses.com customers have asked where they can get their frames adjusted. Truth is many pairs of glasses do not need to be adjusted. But for those of us who do need, or at least prefer, some adjustments, we have some good news!
Glasses.com is excited to announce that we’ve teamed up with LensCrafters to provide all glasses.com customers convenient access for any frame adjustments. Simply drop into one of the almost 1000 LensCrafters stores nationwide, give the LensCrafters associate your receipt from glasses.com, and they’ll gladly help with any adjustments or fittings you need. Any pair. Any style. Any time. And, the best part, it’s all done at no cost to you.
LensCrafters loves eyes. So go ahead and let them show that love to your new amazing glasses, from glasses.com.

see all of it: ============>
http://www.glasses.com/blog/need-adjustments

**merrymaker** · 08-13-2015, 12:58 PM

Will Nordstrom's start adjusting Warby glasses now too?

**Dr. Bill Stacy** · 08-13-2015, 01:07 PM

Like I said, I like the capitalism thing where you charge money for stuff. That free adjustment policy is just communism at work and it will die under its own weight.

**Chris Ryser** · 08-13-2015, 01:08 PM

Originally Posted by drk

It is likely that the overlords of the optical universe, Essilor and Luxottica, are trying to "grow the market, grow the market".

I think they will:
1. Try to get every person on planet earth wearing glasses.
2. Try to get every person wearing glasses to get lots of glasses.

Pretty straightforward objective.

But how do they plan to do that? What would be their strategy and tactics?

Check post above this one ............."Partnered with LensCrafters" They will do adjustments at no charge if purchased from glasses.com

furthermore they supply free lenses if you order a frame,
see at : =============>
http://www.glasses.com

That should explain their strategy and tactics very clear cut.
And do not forget "LensCrafters" is also Luxottica.

**newguyaroundhere** · 08-13-2015, 01:42 PM

Originally Posted by drk

I think, I think, I think...

That they will be lowering prices per unit in order to sell more.

This is actually going to happen

http://www.wsj.com/articles/luxottic...ter-1438021463

As a result of the currency fluctuations, Luxottica said it is now looking at harmonizing prices between the different markets, to reduce price differentials that have emerged particularly between Europe and Asia following the weakening euro. Prices in China and in the U.S. will go down in the second half of the year, particularly in the higher-end product ranges, Luxottica’s Co-Chief Executive Adil Khan said to analysts. “As a common practice we look at prices every six months,” But while normally prices move upward, “it takes a little courage to go down. We do have a favorable situation and we want to make sure we use this moment for prices to go downward,” Mr. Kahn added.

The low euro against the dollar made the price of high-end accessories vary greatly between New York, Paris and Beijing. In March, Chanel made a similar move by increasing prices in Europe on some of its handbags and slashing them in China. Since then, several luxury firms have considered making similar adjustments, but most of them have kept cautious attitudes so far.

**drk** · 08-13-2015, 03:39 PM

I can't understand how that works.

Now with China devaluing their currency, I have no idea what's going on.

**Chris Ryser** · 08-14-2015, 11:57 PM

If they devalue their currency your US Dollars is now worth more, which means you can purchase their goods for less money.

**drk** · 08-15-2015, 09:26 AM

How would debt repayment work? Same way?

**Chris Ryser** · 08-15-2015, 03:06 PM

Originally Posted by drk

How would debt repayment work? Same way?

Exactly...................if you would have borrowed in US Dollars and your currency would be suddenly 20% lower you would still owe the same amount in US Dollars which would cost you 20% more to repay it plus interest at the new rate.

If a foreigner would have invested in the USA a few years back, when (for example) the rate was at 1:1, and would get his money back without any profit on it, he would still make the 20% on the exchange.

**drk** · 08-15-2015, 06:47 PM

A good discussion, here: http://www.latimes.com/business/la-f...htmlstory.html

If I read it right, it says that China has been holding it's currency artificially low relative to the dollar, giving it a trade advantage (cheaper goods to export out and more expensive for U.S. goods to come in).

It says that China has a chance to be a player in the world's currency popularity contest, as long as they reform the way they let the yuan fluctuate more "fairly" against Euros, Yens, etc.

It also says their economy needs a boost.

But this article says that Chinese debt will be harder for them to service: http://www.wsj.com/articles/yuan-dev...ies-1439287991, so I think that it means America's debt to China is cheaper to pay off with a stronger dollar. So, on the one hand, a can of Coke costs more in China, but our loan repayments will go farther. Catch 22.

This is interesting, too: http://www.slate.com/articles/news_a...can_we_do.html

**Chris Ryser** · 08-16-2015, 03:17 AM

Originally Posted by drk

A good discussion, here 0It says that China has a chance to be a player in the world's currency popularity contest, as long as they reform the way they let the yuan fluctuate more "fairly" against Euros, Yens, etc.

It also says their economy needs a boost.

l

China has started to go the way Japan did years ago. Their products are getting more expensive and better. Their infrastructure is to day more modern and better than anywhere else.

Big industry is already silently shifting away from China for the last the last 8 to 10 years and investing heavily into India. I know of a few that are mostly American Corporations in the electronic field and employ over 30,000 people each.

India will much faster adapt to modern times as they were under the rule of the British for close to 400 years.

"On December 31, 1600, Queen Elizabeth I of England granted a royal charter to the British East India Company to carry out trade with the East. Company ships first arrived in India in 1608, docking at Surat in modern-day Gujarat. Four years later, British traders defeated the Portuguese at the Battle of Swally, gaining the favour of the Mughal emperor Jahangir in the process. In 1615, King James I sent Sir Thomas Roe as his ambassador to Jahangir's court, and a commercial treaty was concluded in which the Mughals allowed the Company to build trading posts in India in return for goods from Europe. The Company traded in such commodities as cotton, silk, saltpetre, indigo, and tea. "

See all of it at : ==============>
https://answers.yahoo.com/question/i...4152633AArLA0k

The Asian Center for Optical Manufacturing where everybody has a factory is Thailand.

There is a list of every manufacturer there at :" ==========>
http://bangkok-companies.com/categor...anies_p302.htm

Thailand Optical Companies, ThaiOptical Manufacturers are active in three main areas. Optical instruments mainly for use in the computer industry. Optical fiber used in networking applications. Ophthalmic lenses and spectacle, sunglasses production and in the production and use of optical instruments and optical equipment such as microscopes and other optical based scientific and laboratory equipment

**Dr. Bill Stacy** · 08-16-2015, 08:36 AM

[QUOTE=drk;511551] America's debt to China is cheaper to pay off with a stronger dollar.

I think we have to pay our debt to them with dollars, just like the interest, which seems to me bad for us good for them. I'm guessing the stronger the dollar gets, the more they will be tempted to sell those bonds esp. if they need more cash. Of course if they flood the market with us t-bills, the prices will drop and our interest rates will go up.

grain of salt disclaimer: I'm no economist