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Oct 28, 2008
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Luxottica cuts EPS forecasts as Q3 net falls

By
Reuters
Published
Oct 28, 2008


* Luxottica cuts 2008 EPS forecast

* Q3 net profit falls 7 percent

* CEO says clearer picture should emerge in 2-4 months

(Adds quotes, details, background)

By Marie-Louise Gumuchian and Cristina Carlevaro

MILAN, Oct 28 (Reuters) - Italian eyewear maker Luxottica cut its earnings-per-share forecast after its third-quarter net profit fell, and its chief executive said a clearer picture on the future would emerge in two to four months.

The world's biggest eyewear maker, whose brands include Prada and Ray-Ban, cut 2008 EPS to between 0.96 euro and 0.98 euro, down about 13 percent from a previous forecast of 1.11 euros-1.14 euros at a euro/dollar exchange rate of 1.45.

The new forecast is down 8 percent from last year.

Luxottica's stock ended 1.91 percent lower at 14.2760 euros in Milan ahead the publication of the news.

Cracks have been expected to appear in the global luxury market with signs of cooling demand amid an economic downturn.

In an interview with Reuters, Luxottica Chief Executive Andrea Guerra said the next two to six months would "not be easy".

"It is difficult to give precise expectations at this time because of the economic slowdown and because of a complex situation of insecurity and uncertainty," he said.

"Uncertainty will be short. When this has calmed, we will be able to see the future of 2009 with a better idea ... Another two, three, four months are needed to have a clearer picture for the future."

Guerra said October was full of "ups and downs" for the eyewear maker but had been less difficult than September.

"We are well prepared for the next 2-6 months ... They will not be easy but we have all the instruments in place to do our duty," Guerra said, underlining Luxottica's vertical integration business model and its integration of U.S. sports brand Oakley.

LOWER NET PROFIT

Luxottica said on Tuesday third-quarter net profit fell 7 percent to 104.6 million euros ($130.9 million), almost entirely due to higher financial charges following its acquisition of Oakley last year and to unfavourable exchange rates.

Net sales rose 5.3 percent to 1.212 billion euros, or up 12.8 percent at constant exchange rates. Pro forma operating margin should improve in the fourth quarter from last year.

Guerra said it was no longer giving sales forecasts because of currency fluctuations.

Luxottica had said in February it was expecting 2008 sales of between 5.6 billion and 5.75 billion euros.

"From when things changed after February, we decided to concentrate on profitability and net profit," he said.

"Currencies, not just the dollar, have changed so much, it is nearly impossible to give estimates."

Luxottica has a strong presence in the United States and has been hit by dollar weakness against the euro.

"For the last three years we have had a strong negative impact and we have always given strong responses. Looking at this quarter ... this could be the first quarter in four years with a dollar going the other way," Guerra said, adding a 10 percent dollar fluctuation had an effect of 9 percent on the bottom line.

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