China slowdown issues dim Ray-ban maker EssilorLuxottica’s first quarter By Reuters

By Juliette Portala

(Reuters) -EssilorLuxottica’s shares slipped on Friday as a downturn in its China enterprise overshadowed the French-Italian eyewear firm’s total better-than-expected first-quarter gross sales.

The group, which makes sun shades and spectacle frames for Prada (OTC:) and Versace, reported “deteriorating” gross sales in mainland China as coronavirus instances surged, saying about three quarters of its areas had been impacted by COVID-related closures or subdued footfall.

“We’re nonetheless going via extreme visitors decline over there,” finance chief Stefano Grassi stated on a name, including that it was widespread with solely “a handful of exceptions”.

China’s race to halt the pandemic has clogged highways and ports, stranded staff and shut numerous factories, inflicting disruption that’s rippling via international provide chains.

Shares in EssilorLuxottica had been down 1.9% at 1110 GMT, paring earlier losses of as a lot as 3.9%.

“The market and notably luxurious and client items shares are affected by rising issues a few slowdown in China as a result of lockdowns,” Bryan Garnier analyst Cedric Rossi wrote in an e-mail to Reuters.

These disruptions additionally clouded French luxurious firm Kering (EPA:)’s first-quarter outcomes, reported on Thursday. Its shares fell as a lot as 7% on Friday, weighing on your entire luxurious sector, one other analyst famous.

“A SAFE HAVEN”

Grassi sounded optimistic at occasions although, noting robust gross sales in China of Stellest lenses, which right youngsters’s short-sightedness.

Stifel analyst Cedric Lecasble additionally harassed that the Ray-Ban maker’s publicity to China was restricted.

“A 5% gross sales publicity to China has insulated EssilorLuxottica from the top-line dilution that client friends are affected by,” analysts at Jefferies stated in a be aware to shoppers.

“The group’s resilience to the provision chain disruption … has equally set the shares as a secure haven,” they added.

EssilorLuxottica, which noticed demand for sun shades recuperate within the first three months of the yr, reported income of 5.61 billion euros ($6.09 billion), up 38.1% at present trade charges.

Analysts total pointed to begin to the yr, with group gross sales 2% forward of consensus expectations, based on RBC Capital Markets’ Piral Dadhania.

($1 = 0.9219 euros)