by Juliette Portala
April 22 (Reuters) – EssilorLuxottica fell on the Paris Stock Exchange on Friday as the Franco-Italian eyewear maker’s slowdown in China eclipsed first-quarter revenue that beat expectations.
EssilorLuxottica, which makes sunglasses and frames for brands like Prada and Versace, reported a “deterioration” in sales in mainland China due to the upsurge in coronavirus cases, adding that around three-quarters of its sites have been affected by pandemic-related closures or a drop in footfall.
“We are still experiencing a big drop in traffic there,” group chief financial officer Stefano Grassi said on a conference call, adding that it was a widespread phenomenon with only “a handful of ‘exceptions’.
Efforts in the country to stop the outbreak have resulted in congested highways and ports, stranded workers and shuttered countless factories. Disruptions that ripple through global supply chains.
EssilorLuxottica stock was down 2.6% at 1316 GMT, having lost 3.9% earlier in the day.
“The market and in particular luxury and consumer goods stocks are suffering from growing concerns about a slowdown in China due to the confinements,” said Cedric Rossi, analyst at Bryan Garnier.
SAFE INVESTMENT
The disruptions in China also clouded the quarterly results of Kering on Thursday, whose stock fell 7% on Friday, which weighed on the entire luxury sector, notes another analyst.
Stefano Grassi was optimistic, however, pointing to robust sales in China of Stellest lenses, which correct myopia in children.
“The group’s resistance to supply chain disruptions (..) has also made the stock a safe haven,” Jefferies wrote in a note.
The group, which saw demand for sunglasses recover in the first three months of the year, published sales of 5.61 billion euros for the first three months of the year, up 38.1% compared to the previous year, at current exchange rates. (Report Juliette Portala, French version Augustin Turpin and Diana Mandiá; editing by Kate Entringer)