EssilorLuxottica Delivers Solid Growth Helped by Easy Comparison in Q1; FVE Maintained

We are maintaining our fair value estimate for wide-moat EssilorLuxottica as the company reported solid first-quarter revenue with 11.5% comparable growth. This compares to the 8.8% we forecast for the company for the full year, and was positively affected by the comparison basis from last year, when sales in Europe and Latin America were still hurt by the lockdowns. Sales in EMEA were up 18% on constant exchange rate basis while sales in Latin America were up 21.2%. The North American market, one of the main drivers of performance last year, performed rather strongly (up 7.8% at constant exchange rates). Comparable sales in retail channels were up 3% and sales to the independent eyecare providers saw some slowdown. We anticipate a slowdown in this market in 2022, given very strong growth in 2021, helped by reduced spending on experiences and stimulus packages (up 12.7% from 2019 levels versus 4% growth in the region pre-coronavirus). Sales in Asia were negatively affected by COVID-19 lockdowns in China and were up 3%. Despite severe traffic declines in the Chinese market, Stellest (an innovative myopia preventive care lens product) enjoyed higher volume sales in the first quarter of 2022 than the first half of 2021.