De Rigo: results for 2003
De Rigo posted net sales of Eur 504.8 m1 for 2003, a 1.5% decrease as compared with last year. The overall sales results were negatively affected by the appreciation of the Euro against other currencies in which De Rigo makes sales. When calculated on a constant exchange rate basis, De Rigo's consolidated net sales increased by 3.5%.
Wholesale & manufacturing sales amounted to Eur 136.2 m, a decrease of 3.5% as compared with Eur 141.1 m posted in 2002, primarily reflecting softer sales results in certain European markets, primarily in Italy, and lower sales to Eyewear International Distribution (Eid), the former joint-venture with the Prada Group. Foreign currency translation differences accounted for a decrease of 1.6% in the total figure; as a consequence wholesale & manufacturing sales decreased by only 1.9% on a constant exchange rate basis. Softer sales in certain European markets and to Eid were partially offset by strong growth in the Rest of the World area, where the segment posted a 18.8% increase in sales. The increase was driven by very good results in the Far East region that were primarily attributable to increased sales of both the Group's owned brands and its licensed designer brands.
Sales through retail companies increased by 0.5% to Eur 361.5 m from Eur 359.6 m in 2002. When calculated on a constant exchange rate basis, sales through the retail companies increased by 7.0%.
Sales at Dollond & Aitchison (D&A) grew by 7.5% in Pound Sterling terms, while same store sales per working day increased by 7.6%. In Euro terms, D&A's sales totalled Eur 230.8 m, a decrease of 2.3% as compared with sales of Eur 236.2 m posted in 2002, reflecting the decline in the value of the Pound Sterling against the Euro. Sales of franchised stores during the period amounted to Eur 62.9 m, unchanged as compared with 2002; in Pound Sterling terms, sales of franchised stores increased by 10.1%. The notable increase in D&A's sales in Pound Sterling terms, which was achieved in a very difficult environment marked by a decline in overall demand, was primarily attributable to D&A's aggressive marketing activity. At December 31, 2003, D&A operated a network of 232 owned shops and 144 franchised shops.
General Optica (GO) reported sales of Eur 130.7 m, an increase of 5.9% as compared with sales of Eur 123.4 m posted in 2002. This 5.9% increase was achieved on top of the 11.6% sales increase posted in 2002. Same store sales per working day increased by 4.3%, on top of a 8.5% increase recorded in 2002. Management believes that GO has continued to gain market share in the Spanish market, primarily as a result of the opening of additional company owned stores, the expansion of its franchise network and higher sales of sunglasses, as well as the opening of 2 new stores devoted to sunglasses (1 owned and 1 franchised). At December 31, 2003, GO operated a network of 142 owned shops and 14 franchised shops, having opened a net total of 2 owned shops and 9 franchised shops during 2003.
As a result of De Rigo's July 2003 sale of its controlling interest in Eid, De Rigo recorded sales through Eid of only Eur 19.8 m in 2003, as compared with sales of Eur 31.2 m in 2002.
The Group's consolidated net sales of Eur 504.8 m were broken down as follows: eyewear sales of Eur 235.8 m; lens sales of Eur 143.7 m; contact lens sales of Eur 74.7 m; other sales and revenues of Eur 50.6 m, as compared with sales of Eur 245.4 m, Eur 138.7 m, Eur 76.5 m and Eur 51.9 m, respectively, for 2002.
Foreign currency translation differences had a negative effect on consolidated net sales, particularly with regard to the translation into Euro of sales made in Pounds Sterling, Japanese Yen and Hong Kong Dollars, as the average exchange rates for these currencies in 2003 were less favourable to the Group than those during 2002. As shown in the table above, when calculated on a constant exchange rate basis, De Rigo's consolidated net sales increased by 3.5%.
Analysing consolidated net sales by geographic area, net sales in Europe decreased by 2.2% to Eur 453.8 m, primarily as a result of the appreciation of the Euro against the Pound Sterling. Net sales in the Americas remained unchanged at Eur 12.0 m. Net sales in the Rest of the World increased by 6.6% to Eur 39.0 m, primarily as a result of increased unit sales in the Far East, the positive effects of which were only partially offset by the unfavourable trend in Japanese Yen and Hong Kong Dollar exchange rates and by the negative effects on consumption during the first half of the year due to the impact of the SARS crisis and the war in Iraq.
Ennio De Rigo, Chairman of the De Rigo Group, commented on the 2003 sales results: 'We closed successfully a year that had started with difficulty as a result of the negative effect on consumption of the Sars outbreak and the Iraqi war. The decline in our sales results caused by the appreciation of the Euro was largely offset by the impact of good customer response to our licensed brands collections and by the positive results of the strategy of supporting our owned brands collections with well known spokespersons: for 2004, David Beckham, the English national team and Real Madrid football star, will be the spokesperson for the Police brand, while the six time Formula One World Champion Michael Schumacher will be the spokesperson for the Sting brand. The successful implementation of marketing strategies at D&A and store network expansion at GO helped us to continue to gain market share in our retail business. I believe the benefits of this strategy will be reflected in our future retail results'.
